A PROJECT REPORT

ON

FLAT SCHEMES : BUILDERS’ AND CUSTOMERS ‘ POINT OF VIEW

Submitted to SINHGAD INSTITUTE OF MANAGEMENT

In partial fulfilment of the course

Master of Business Administration

MBA Semester I

Submitted by

Raj R.Deshpande (F - 06)

Ruchika Khairkar (F - 17)

Nitin Patil (F - 35)

Sayali Sane (F – 44)

Under the guidance of Project guide-

Prof. Mangalgouri R. Deshmukh

ACKNOWLEDGEMENT

The project topic would not have seen the light of the day without the whole-hearted support of our guide Prof. Mangalgouri R. Deshmukh. We admire her infinite patience and understanding that she guided us in a field we had no previous experience. We are grateful to her for having faith in us. Ma’am also guided us through the essence of time management, need of efficient organization, presentation skills and how vital it is for a management student to think from a research perspective. Whenever we approached her, she explained the concepts lucidly, so that it would be simplified and be vivid in our minds.

We are running short of words to express our gratitude for the support and faith that all the members of Sinhgad Institute of Management, have shown in us.

Last but not the least; we thank all the authors of various research papers and articles who have provided us directions in this domain. Their research contributions have assisted us in trodding a long way.

Raj Deshpande Sayali Sane Ruchika Kahairkar Nitin Patil (MBA-I DIVISION- ‘F’)

FLAT SCHEMES : BUILDERS’ AND CUSTOMERS’ POINT OF VIEW

Certificate

This is to certify that the project entitled FLAT SCHEMES : BUILDERS’ AND CUSTOMERS’ POINT OF VIEW, which is being submitted herewith for the partial fulfilment of the research project in Masters in Business Administration ,Semester I of University of Pune, is the result of the original work completed by Raj Deshpande, Sayali Sane, Ruchika Kahairkar, Nitin Patil under my supervision and guidance and to the best of my knowledge and belief the work embodied in this project has not formed earlier ,the basis for the award of any Degree or Diploma or other similar title of this or any other University or examining body.

Date: / /

Place: Pune

Prof. Mangalgouri R. Deshmukh

(Project Guide)

TABLE OF CONTENTS

➢ Abstract

➢ Introduction and significance

➢ Literature Review

➢ Objectives and hypothesis

➢ Research design including sample design

➢ Analysis tools used

➢ Findings

➢ Conclusions

➢ Limitations

➢ Bibliography

ABSTRACT

The research was aimed at understanding customers and builder’s point of view towards flat scheme. Total 60 customers were interviewed with help of questionnaire to understand their preference towards buying houses. The age group of the customers was 25 – 35 years. It was found that customers want to buy 2 BHK. They want to buy houses in outskirts of Pune especially in Hadapsar and Magarpatta city. 15 builders were interviewed to understand their focus of construction. It was found that builders are focusing more on constructing flat schemes than townships. In flat schemes they are focusing more on constructing 2 BHK and 3BHK. The preferred area by builders is Satara road, Katarj. They spend on an average 4 lacs on promotions focusing more on 2 BHK flats.

Key words: Flat scheme, Builders, Customers

CHAPTER 1

Introduction and Significance

Introduction:

Pune is the seventh largest metropolis in India, the second largest in the state of Maharashtra after Mumbai and the largest city in the Western Ghats. Pune city is the administrative capital of Pune district. Pune is popularly nicknamed as „Queen of Deccan‟, „Pensioners Paradise‟, „Cultural Capital of Maharashtra‟, „Cyber City‟ etc. owing to its location, pleasant climate, historical importance, vibrant culture and presence of IT-ITeS centres.

Pune is known for its educational facilities and relative prosperity. Pune is the cultural capital of Maharashtra. It has a growing industrial hinterland, with information technology and automotive companies setting up factories in the district. Pune is a thriving industrial centre sheltering manufacturing units of some of the most prestigious industrial houses of the world.

Whilst the metropolitan city of Mumbai has witnessed massive real estate development in the past decade, emergence of Pune is becoming increasingly integral to the real estate sector in Maharashtra and the country at large. Driven by positive demographic and income trends; auto and education industry; and fast-developing infrastructure, Pune claims the status of one of the leading real estate destinations in India.

Pune has witnessed tremendous growth and development in real estate in the recent years. The city continues to witness good traction this year as well as this market continues to be relatively more affordable and new launches are helping to keep the momentum.

Real estate in Pune has grown more rapidly and to higher levels than in most other Indian cities. Property prices have multiplied in almost all parts of the city and the suburbs and neighbouring areas have been getting absorbed at a considerable pace – although the market is not fully immune to a slowdown in the global and national economic environment.

There are various reasons for Pune's sudden rise in real estate fortunes. Pune is home to a large number of educational and training institutions that cover every aspect of academics, finding such a diverse treasure of knowledge and learning in one city is quite unusual. Pune also boasts of other attractions to tourists. For instance, it offers a full-fledged horse racing infrastructure which is a major attraction among people from other cities.

However, the major driving force behind Pune's success in real estate market is the Information Technology edge. Pune and its outlying localities such as Hinjewadi, Kharadi, Hadapsar, Aundh and Wakad are very much under the spotlight since the first multinational giants began expressing serious interest in them.

Close proximity to the financial capital – Mumbai and rapidly moving infrastructure has made Pune one of the most sought-after destinations in the country today. A large number of migrants from different parts of the country have led to a realty boom in the city. With respect to its potential, a slew of other developers from other cities of the country are also making their presence felt and looking forward to reap the benefits of the inherent demand that Pune offers.

At present, the real estate and construction sectors are playing a crucial role in the overall development of Pune's core infrastructure. Pune real estate industry’s growth is primarily linked to developments in the retail, hospitality, Special Economic Zones (SEZs) and IT Industry.

The Pune real estate market has been driven by genuine demand resulting in increased development of both commercial as well as residential space. The real estate sector in Pune has seen a lot of deviations, initially dominated by commercial players to residential groups now. The market was earlier dominated by commercial real estate projects but with the increasing number of immigrants and working population the demand for residential housing projects has increased tremendously.

Thus “trends in real estate in Pune” is an interesting topic of study. The buying behaviour of the customers in Pune and the business point of view of builders is an important factor in the real estate scenario in Pune. Hence there is a need to study the perception of customers towards buying the flats in Pune, As well as the focus of builders in constructing the flats.

Significance:

With the increasing number of employment opportunities in the city, the demand for homes is also rising steadily, and continues to climb steadily. The developers who were earlier focussing only on the commercial projects are now moving towards building residential projects in Pune. This shift in trend has occurred due to the continuously increasing number of Special Economic Zones (SEZ) in Pune along with improving infrastructure and good connectivity to Mumbai.

Pune is growing at its periphery. Since the space in the core area is restricted, most builders are constructing projects in the periphery.

The real estate space in Pune is classified into five distinct zones - Central Pune, North Pune, South Pune, East Pune and West Pune.

1. Central Pune: Bhosale Nagar, Deccan, Model Colony, Prabhat Road, and Shivaji Nagar

2. North Pune: Chinchwad, Akurdi, Pradhikaran, Talegaon, Chakan, and Ravet

3. South Pune: Ambegaon, Katraj, Kondhwa, Parvati, Salisbury Park, Sinhagad Road, Mohammadwadi, NIBM, and Warje

4. East Pune: Boat Club, Hadapsar, Kalyani Nagar, Kharadi, Koregaon Park, Wagholi, and Viman Nagar

5. West Pune: Aundh, Balewadi, Baner, Bavdhan, Hinjewadi, Kothrud, Pashan, Pimple- Saudagar, and Wakad.

In all these areas, various new projects are being constructed. This is a huge space and hence it is important to know which of these are considered as prime locations by builders. Also it is important to understand the customers psychology while buying houses in various areas. Hence the study of builders’ perception and customers point of view is important to understand current real estate scenario in Pune.

CHAPTER 2

Litreature Review

Pune real estate market has expanded by 16.6% in period between June 2011 and June 2012, as per a research report from Gera Developers. During this period, prices went up by 14.08% while the preceding months registered an average growth rate of 10.66%. Micro-markets such as Kolhewadi and Bolhai clocked price appreciation in excess of 50%, and as many as six micro-markets had a price gain of more than 25%.

Residential real estate industry in Pune has witnessed stupendous growth in the past few years owing to the following reasons: 1. increase in business opportunities 2. increase in number of immigrants 3. ample job opportunities in service sectors 4. growing income levels 5. increased affordability

With the increase in city’s population driven by the IT boom resulting in a large migrant population shifting base to the city, there has been a considerable residential activity in the region in the last few years. IT zones in the city are witnessing fast development with a string of new and contemporary residential complexes on the anvil. These comprise of Kharadi, Hinjewadi, Nagar road, Vimannagar, Kalyannagar, Hadaspur, Aundh, Baner, Bavdhan, and Pimpri Chinchwad.

Primarily the end-user segment drives the demand for residential units in Pune. Even during the economic slowdown, the decline in capital values in Pune was on the lower side as compared to most of the other major cities. Between 2009 and 2011, capital value in Pune posted CAGR of 14%, next only to Mumbai, which grew by 19% Compound Annual Growth Rate (CAGR) during the same period. The fact that during the brief recovery period of 2012, Pune did not see the kind of run-up in capital values that was evident in Mumbai actually helped affordability levels and demand conditions to remain relatively better. As far as increase in capital values is concerned, Pune is expected to grow at about 8% year-on-year during 2012 to 2013 according to CRISIL.

CHAPTER 3

Objectives and Hypotheses
Every research is focused towards particulars objectives. The objectives for the research are:

1. To study builders’ point of view towards flat schemes – Promotions, Construction

2. To study customer’s point of view towards buying flats

3. To study major criteria of customers while buying flats

CHAPTER 4

Research Design

Survey method was used and questionnaires were administered for data collection

Sample size and description:

There are two different sample groups focused in the research.

1. Builders:

Prominent midsize builders from the Pune city were targeted for the research. 15 builders from the Pune city were interviewed for collecting data.

2. Customers:

Customers who are looking for flats were interviewed for collecting data regarding customers’ point of view. The customers were divided in 3 different prominent groups as per their age.

a) 25 – 35 years

b) 35 – 40 years

c) 45 years and above

There were 48 customers from the age group 25 – 35 years, 30 customers from the age group of 35 – 45 years, and 20 customers from the age group 45 years and above.

More focus was given on the age group 25 -35 years.

Other demographic aspects such as annual income, current occupation, marital status, and preference for buying house were also asked to the customers.

Method used for sample collection

Stratified random sampling method was used for selecting sample of customers.

Tool used:

Two different questionnaires were used to collect data from builders and from customers.

a) Builders: Sales executives/ Marketing executives were interviewed for collecting information

b) Customers: 80 customers were interviewed for collecting information

Area of survey:

The survey was confined to Pune city only. The sample selected was from Pune city.

Analysis tool used:

Microsoft excel was used for analysing the data and deriving trends from the information

CHAPTER 5

Findings

Scope of research:

The research was aimed at understanding point of view of builders towards flat schemes. The second objective was to understand customers perception towards buying flats. The data was analyzed on the following points:

➢ Customer:

Reasons for buying new house

Age group wise division

Annual income wise division

Preferred type of house by customers

Preferred locations of the customers

Research findings:

Major reasons for buying houses:

1. To live in

2. Need a house close to work place

3. Growing family

4. Migration to Pune for job or education

5. As an investment

Customer division as per age and annual income:

a) As per age: Total 60 customers were interviewed. Following is the division of customers as per age group. More focus was given to the customers in the age group of 25 – 35 years as that is the working population and this is the population who mostly are first time buyer for real estate. Following is the table and graph showing division of customers as per age.

|Age |Number of customers |
|25 - 35 |48 |
|35 - 45 |8 |
|45 and above |5 |

[pic]

(Graph 1 - Age wise division of customer)

b) As per income:

The customers were divided in 4 different groups as per their annual income. More focus was given to the customers in the income group of 1 lac- 5 lacs annually.

Following is the graph showing division of customers as per annual income.

|Annual Income |Number of customers |
|Less than 1 lac |15 |
|1 lac to 5 lac |22 |
|5 lacs to 10 lacs |11 |
|More than 10 lacs |2 |

(Table 2 – Incomewise distribution of customers)

[pic]

(Graph 2 – Income wise number of customers)

Preferred type of houses by customers:

As per the research it was found that the customers in the focused age group that is 25 – 35 years of age group prefers 2 BHK more.

This is because most of the customers in this age group were looking at the house to live in. Their prominent need was a bigger house enough for 4 people. They reported that in future they might need a big house and looking at current real estate need the price might go up even more hence they were thinking of buying 2 BHK at this point itself. Few of them were also thinking from the point of view of investment so they can earn money by renting the flat to either students or families.

Following is the Table and graph showing preference of customers towards 2 BHK.

|Type of house preferred |Number of customers |
|1 BHK |5 |
|2 BHK |16 |
|3 BHK |9 |
|Bunglow |15 |

(Table 3 – Preference of customers towards type of house as per age)

[pic]

(Graph 3 – Preference of customers towards type of house as per age)

Also the income plays major role in preference towards type of house customers wants to buy. Customers who have annual income in the range of 1 lac – 5 lacs are keen towards buying 2 BHK. They preferred 2 BHK because they wanted to do 1 time investment for may be next few years.

Following is the table and graph showing preference customers towards type of house

|Type of house preferred |Number of customers |
|1 BHK |4 |
|2 BHK |11 |
|3 BHK |8 |
|Bunglow |6 |

(Table 4 – Preference of customers towards type of house as per income)

[pic]

(Graph 4 – Preference of customers towards type of house as per income)

Preferred Location of customers:

As per the research it was found that most of customers preferred Hadpsar, Magarpatta city area for buying new houses. The reason behind it was that in that area many builders are coming up with their new projects. Also Magarpatta is considered as second IT hub after Hinjewadi and many new companies are opening their offices in the same location. Hence buying house in that area will reduce their commute to the office. As the age group of the customers is 25 – 35 years, the youth is looking also for entertainment factor. With the Amanora mall and many other malls in the camp, kalyani nagar viscinity,they are giving more preference to Hadpasar, Magarpatta city area.

The second preferred location is Kothrud, Karve nagar. This area was preferred by the people who have children mostly because this area has very welknown schools. For these people the school was the criteria rather than their own commute to the office. Customers who are looking from the point of view of investment prefer this area because they can give it out on rent to students since this area has many colleges and colleges like Fergusson, Sinhgad are also in viscinity.

The following table and graph show the preference of customers towards location.

|Area preferred |Number of customers |
|Baner, Pashan, Aundh |7 |
|Deccan, Model colony |9 |
|Hadapsar, Magarpatta |13 |
|Kothrud, Karve Nagar |10 |
|Sinhgad road |6 |

(Table 5 – Preference of customers towards location)

[pic]

(Graph – 5 – Preference of customers towards location)

Builders:

The data was also analyzed for understanding builders’ perspective towards flat scheme and their preferred type of houses and locations.

Preference of builders towards types of flats:

Builders’ are focusing more towards constructing flat schemes than townships and row houses.

|Types of projects undertaken |Number of builders |
|Flat scheme |11 |
|Row house |3 |
|Duplex |2 |
|Township |2 |

(Table 6 – Builders’ preference towards constructing types of house)

[pic]

(Graph 6 – Builders’ preference towards constructing types of house)

Builders are focusing more on constructing 2 BHK and 3 BHK rather than 1 BHK or bunglows.

Following is the table and graph showing builders’ preference towards 2 BHK flat schemes.

|Prominent focused housing schemes |Number of builders |
|1 BHK |10 |
|2 BHK |12 |
|3 BHK |8 |
|Pent house |1 |

(Table 7 – Builders’ preference towards constructing type of house)

|Preferred areas for construction |Number of builders |
|Hinjewadi, baner, Balewadi |2 |
|Warje,Dhairee,Vadgaon |3 |
|Kothrud,Karve Rd. |2 |
|Hadpsar,Nagarpatta,Fatima Nagar |2 |
|Katraj,Kondwa,Satara rd. |7 |

[pic]

(Graph 7 – Builders’ preference towards constructing type of house)

Area preferred by the builders for construction:

Preferred area for construction by builders is Satara road, Katraj, Kondhawa. This is because there is not manybuilders who have started projects there and the space is available easily. The second factor is that this area is close to highway and hence now growing rapidly.

[pic]

Following is the table and graph showing preferred area by the builders:

CHAPTER 6

Conclusion

From the research following conclusions were drawn:

From Customers point of view:

1. The present scenario in real estate from a customer point of view demands housing schemes of 2 BHK. This is dependent on the age of the buyer and financial capacity.

2. The area preferred by the customer depends on parameters such as age of the buyer and financial capability. The preferred area by the age group 25 – 35 is Magarpatta city, Hadapsar since it is a growing IT hub and lots of new companies are coming to this area.

From Builders’ point of view:

1. The present scenario in the industry tells us that builders are more keen towards fulfilling demands of customers as prominently focused housing scheme is 2 BHK

2. Cost of construction varies in the range of 1cr – 25 crs and above

3. The builders are focusing on promotions of the project so that they can reach maximum target customers. Builders are prominently promoting 2 BHK flats.

4. Average promotional cost range is 4 – 6 lacs.

Limitations:

Following are the limitations to the research:

1. The sample size is small.

2. As convenience sampling is used, the sample is biased.

3. The area from which sample is collected is restricted.

CHAPTER 7

Bibliography

1. http://www.indiarealestateforums.com/news-feed-blogs/28-pune

2. http://hitendrachoudharysblog.blogspot.in/

3. http://ravikarandeekarsblog.blogspot.in/

4. http://www.thehindubusinessline.com/news/states/pune-real-estate-market-sees-average-appreciation-of-15-in-2012/article4418019.ece

5. http://www.icicihfc.com/property_pdfs/pune-report-2012.pdf