Company

Every structure belongs to its location and time. The prognosis analyses the plot/location characteristics with prevailing market dynamics and delves into various options to find out the one which gives highest and maximum development realisation. Structure of prognosis:

Step-1: Subject-site assessment

Primary visits and surveys are made to and around the subject-site to get a feel of the area.

• Drawing a catchment of the subject-site generally it is 5 km but depending on the site and development mix the catchment area varies
• Field survey of the catchment
• Regional profile of the catchment
• Land use distribution in the catchment and
• Infrastructure and demographic/population profile within the catchment
• Connectivity and accessibility
• Environment and topography as well as land gradient within catchment

Through analysis of catchment and influencing competition is imperative for ensuring success of your project.

Step-2: Assessment of Prevailing Market Dynamics

The second step involves detailed analysis of performance of the products within the catchment of the subject-site. This involves deeply analysing the market inventory, sales, price, volumes and offtake velocity of the market as a whole as well as competition level. This analysis would cover all the segments individually such as

• Residential
• Commercial
• Hospitality
• Retail
• Other unconventional options

Using our quarterly updated data of the market, we asses the past trends and through the leading indicators future course of the market is also taken into consideration.

The primary supply data is collected by filed surveys.

Step-3: Ideal Development Mix, Product Mix and Fair Price Assessment

Under this process we analyse the performing and risky products. We also analyse the price and velocity (offtake percentage).

• Demand drivers in the catchment for residential/commercial/hospitality options
• The best mix of if undertaking more than one option
• The most popular product in the catchment
• The best ticket size for each kind of product
• Gradation and Mapping of the competitive projects on the basis of their value offerings and price

This phase is extremely crucial in the overall success of a project as it determines the options of development mix. Depending upon the available FAR/FSI, suggestions are made to determine the options of development mix.

Step-4: Financial Viability

A detailed cashflow analysis is carried out to ascertain the best performing option and also to determine the timeline and phases of the development. A detailed financial-economic model to show scenarios with different outright and lease rates, etc. Detailed calculations shall include

• Total Cost & Revenue
• Monthly Cashflow
• Peak Negative Cashflow
• Equity & Debt component
• Return on Investment
• Return on Equity
• NPV
• IRR

Sensitivity analysis to check the viability of the best option at various outright rates is given importance. And timeline of the suggested development mix is made.

Additionally we also carry out two specific services according to the need of the client

a) Product Viability Study

Is to ascertain that the envisaged development and product plan of the developers are correct or risky. The overall objective of the study is to analyse the competition and validate the envisaged product-mix at the subject-site. The typical approach goes like this:

• Assesing market dynamics of specific product mix such as 3BHKs and 4BHKs in a specific region
• Assessment of its diffusion in the micro-market
• Product performance as per various cost brackets/ticket sizes (such as less than Rs 25 lac, Rs 25 lac to Rs 50 lac, over Rs 1 core etc)
• Demand and efficiency study of such flats on the subject-site and catchment
• Quality and profile gradation of competitive projects in the catchment
• Assessment of optimum price points to arrive at base feasible selling rates
• How much could be the absorption capacity and offtake velocity (that is how much time will a project take to get consumed)

Again the catchment area is determined depending upon the scope and profile of the study

b) Risk Reports

Risk Reports are carried out primarily to asses the state of the market and measure the price correction during oversupply scenario or default risks in the market. The approach followed is:

• Firstly to gauge the market dynamics and price behavior
• To analyse the market trends with regard to demand, supply and price movements
• The scientific equations are established to determine the price patterns of the geography

Offtake velocities, market efficiencies, affordability, and the prevailing price metrics are used to ascertain the fair price and gaps and thereby prevailing rates and scope of corrections are determined. Overall report has four sections:

• Assessment of the prevailing market
• Assessment of market risks
• Assessment of future outlook
• Gradation and Mapping of the competitive projects on the basis of their value offerings and price

Valuation is not a perception but a science! Real estate is a specific point on geography and should have distinct price. But, no two valuers arrive at the same value. The basic questions that haunts everybody are:

• What is the right price of a property?
• Are prices determined by only perceptions?

Although perception does matter but at the same time multiple other factors also play a crucial role while arriving at the value of a property. Objective of a good valuation is it to get the market value of an asset according to the existing market conditions.Valuation of land is dependent upon the prevailing selling price of the products developed on the said land.

Determination of attainable selling price for residential development keeping in mind the dynamics of prices in real estate industry.

The spatial model suggests that prices are the function of the travel time from the Central Business District (CBD). Closer the location to the CBD, higher the price the property will command. A well established model tested over the years across numerous countries, denotes an extremely high correlation between prices and workplace. It also suggests that people select the location to live on the basis of where they work. In other words, convenience to commute to the workplace decides the location to live.

The prices of locations are governed by their distances from the key CBDs of any city. From our past works we have found that prices of locations across timeline show a correlation of more than 80% as per time – distance equation. This signifies that the so-called unorganised and irrational real estate is governed by unseen science, which also goes on to establish that people select the location to live on the basis of their workplace.

Additional factors / gains

The value addition on that coordinate can be assessed by virtue of mapping the competitive profile of the products/projects within the catchment or the influencing area. In order to analysis the value addition, we carry out a competitive grading analysis of the projects and attempt to assess the differential in their grades on the basis of their differential product profiles.

While we give most importance to the distance of a location from the primary CBD/CBDs in a city while valuing it, we also include several other crucial factors. We have been tracking the real estate market movement and its behaviour closely for past several years and have realty market dynamics across defined datapoints. Exhaustive database forming the basis of our approach ensures no oversight during the valuation process. Our database unravels

• Demand vs supply scenario and its impact on prices / values at various intervals
• Gestation period of a location / property
• Offtake levels at various price points over a period

Furthermore, we employ the following methodology to determine the value of a property

• Estimating the intrinsic value of the asset according to its basic characters
• Value according to present and expected future cashflows on the asset
• Future risk in generating cashflows
• Comparable market value analysis
• Average rental yields in the competitive market
• Property grading as per following datapoints:
  • Location
  • Distance from CBD
  • Overall infrastructure
  • Connectivity
  • Accessibility
  • Convenience
  • Social fabric and surrounding
  • Developer details and credentials
  • Title of the land
  • Construction progress since commencement
  • Construction quality
  • Parking facility
  • Security
  • Amenities
  • Sustainability

Designed, especially to help mortgage industry professionals identity issues which can lead to time or cost overrun of real estate projects, Monitoring Services is aimed at achieving the following:

• Our Proposed services can be classified into four segments namely:
  • Preliminary Assessment
  • Pre Approval Assessment
  • Monitoring of Milestones for Disbursements
  • Monitoring of the repayments
• Setup mechanism to ensure that the sales revenue has to come into the bank account and applied first to repayment
• If the project is stalled, analyze the reasons for the same and report. Ensure the money is spent only for the project sanctioned
• Monitor progress using the software and give regular feedback about delays and cost overrun.
• Whether the construction work can be started, when the disbursement is made by the bank.
• Identification of the issues which can be lead to time & cost overrun of the project.
• Stakeholders cooperation (tenants, slumdwellers, local politicians, etc.)
• Examine techno economic feasibility report & do project rating.
• Market Analysis Report and Supply Demand scenario.
• Status of pending clearances and approvals.
• Land title
• Basic plans & Municipal approvals
• IOD and other IOD conditions
• Feasibility Report prepared by developer
• Statutory clearances
• SPA clearances
• FSI calculations
• Time & activity schedule
• Preliminary Feasibility Report on the basis documents submitted to the Bank will cover the following:
  • Whether revenue assumption are in line with market.
  • Whether projections are achievable.
  • Sensitivity analysis for risk cover.
• Document Analysis
  • Check basic set of documents for validating timeline and assumptions.
  • Examine & list major missing documents / approvals.
• Time Line – 3- 4 Working Days
• Reporting for granting in-principle approval to the project.

We have carried out several project ratings. The entire rating technique is based on the importance of all the factors and attributes which a buyer takes into consideration before buying a property. We are the only one to carry out project rating from buyers’ perspective.

While rating a project we give weightage to these characteristics (from most important to least important)

• Sustainability
• Location
• Accessibility/Reach
• Builder’s Credibility
• Product
• Lifestyle
• Infrastructure
• Surrounding
• Amenities
• Security
• Cultural Appropriateness

Furthermore we give weightage to following factors as well

• Marketing Dynamics
  • Efficiency of the location
  • Demand and supply scenario
  • Price efficiency
  • Relative demand and business turnover coefficient
• Scope of Appreciation
  • Infrastructure improvement
  • Timeline of other upcoming projects
  • Timeline and construction progress of the project being rated since its commencement

Hierarchy of factors while determining rating of a project: