Assessing the Potential of the Real Estate Industry in India

strategic due diligence

Client Challenge

 A Singapore based fund house was interested in the growing Indian real estate market. The company requested UC Strategy understand the following key dynamics of the Indian real estate market:

  • Fundamental growth drivers
  • Market potential
  • Market potential in key cities/ towns

The company also wanted to understand the competitive landscape, for example

  • Existing real estate funds
  • Key Service and Product offerings
  • Market strategies adopted etc.

Our Approach

To conduct the detailed study of the MRP II system for the client, UC Strategy adopted the following approach:

  • Requirements planning module, though designed and developed, was not implemented due to order backlogs
  • Assessed benefits of implementing MRP II systems in terms of inventory reduction, material movement and capacity utilisation
  • Rated the MRP II system against an ideal MRP II functionality checklist

To assess the potential, UC Strategy adopted the following approach:

  • Determined the causes of the following delays in implementation –
  • Lack of top management ownership for implementing the MRP II systems
  • Lack of adequate end-user involvement, training and understaffed departments to implement the change
  • Continuous changes in functional specifications to impact the implementation schedules
  • Inaccurate Bill of Materials(BOM), absence of integrity between BOM and product drawings, and duplicate item codes impacting all modules
  • Capacity req
  • Identified key growth drivers for the real estate market
  • Conducted detailed analyses of each growth driver and its impact on the real estate scenario in 41 cities/ towns
  • Some of the factors analysed were –
    • Square feet to be added in information technology, information technology enabled services and retail
    • Existing and emerging manufacturing clusters
    • Number of hotel rooms to be added, medical tourism etc.
    • Investments to be made in special economic zone (SEZ), No. of SEZs, approval status etc.
    • Derived growth in residential segment
    • Housing loans disbursed and likely growth etc.
  • Analysed case studies for the impact of malls, hotels, SEZs etc. on the real estate prices and hence the likely potential of price inflation in cities
  • Identified key cities based on parameters that are likely to have a high growth potential
  • Landscaped competition in the real estate fund segment, for example –
    • Size of fund
    • Type of fund (domestic, international)
    • Fund’s geographic focus (Tier I, II, II cities) etc.
    • Asset types focus (commercial, residential, retail, SEZ etc.)
  • Highlighted key challenges and risks facing the real estate markets in India

Our Impact

UC Strategy delivered to the client the specific details and future possibilities of the real estate sector in India.

 

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