Financial Analysis of the Real Estate Industry in India

J. C. Edison

doi:doi:10.11648/j.jbed.20170201.16

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Financial Analysis of the Real Estate Industry in India

J. C. Edison

Published in Journal of Business and Economic Development (Volume 2, Issue 1)

Received: 25 October 2016 Accepted: 22 November 2016 Published: 13 January 2017

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Abstract

The purpose of the study was to examine: (i) the relationship between real estate sector investment and GDP; and (ii) analyze the financial parameters of Indian real estate industry. Simple linear regression analysis was used to test the relationship between real estate sector investment and GDP. The results indicate a positive relationship between both the variables. Financial analysis was carried out by taking financial aggregates, financial ratios, ratios pertaining to margins on income, returns on investments and efficiency ratios of the real estate industry in India. The financial analysis of Indian real estate industry reveals that: (i) the real estate industry is yet to recover from recession; (ii) the profit generated during an accounting period against the total income generated was continuously declining during the recent years; (iii) operating profit is decreasing; (iv) returns on funds provided by its equity shareholders have declined considerably; (v) profitability as a ratio of capital employed is currently having a downward trend; there is a drastic slump in returns generated on the total funds deployed by it in the business; (vi) there is a drastic fall in returns that the Indian real estate industry generates on the fixed assets created by it; (vii) asset utilisation points out a trend of increase in expenditure; and (viii) able to give only a bare minimum amount of returns.

Published in	Journal of Business and Economic Development (Volume 2, Issue 1)
DOI	10.11648/j.jbed.20170201.16
Page(s)	44-56
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Real Estate, Real Estate Industry Analysis, Industry Analysis, Real Estate Industry, India

References

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[2]	Government of India, The Real Estate (Regulation & Development) Bill, 2011.
[3]	Government of India, Economic Survey 2010-11, p. 251.
[4]	Gill, A., S.P. Sharma, H.S. Mand, and N. Mathur, Factors that influence Indian Propensity to Invest in the Real Estate Market, Journal of Finance and Investment Analysis, 1 (2), 2012, pp. 137-156.
[5]	Gill Amarjit S., Harvinder S. Mand and RajenTibrewala, Factors that Influence the Decision of Indian Investors to Invest in the Real Estate Market,International Research Journal of Finance and Economics, Issue 100, 2012, pp. 112-121.
[6]	Singh, Vandna and Komal, Prospects and problems of real estate in India, International Research Journal of Finance and Economics, Issue 24, 2009, pp. 242-54.
[7]	Porter, Michael E., Competitive Strategy and Real Estate Development Harvard Business School-remarks to the 1989 Harvard Business School real estate symposium, 1989.
[8]	Sanford J., Foreign attraction, Canadian Business, Vol. 79 (10), 2006, pp. 163-165.
[9]	Gill, Amarjit S., Harvinder S. Mand and RajenTibrewala, Op. cit., 2012, p. 113.
[10]	Economic Survey 2010-12, Op. cit., p. 241.
[11]	Singh Vandna, (Op. cit., 2009), p. 253.
[12]	Mehta, Rashi, A Study on the Indian Real Estate Market for Investment: A qualitative approach, Dissertation, The University of Nottingham, 2007.
[13]	Vishwakarma, Vijay Kumar, The Journal of Applied Business Research–January/February 2013, Volume 29 (1), 2013, pp. 167-172.
[14]	Kaiser, Ronald W., The long cycle in real estate, Paper presented to the American Real Estate Society Conference Sarasota, Florida, 1997.
[15]	http://www.ibef.orgartdispview.aspx?in=60andart_id=32963andcat_id=381andpage=1
[16]	http://pib.nic.in/newsite/erelease.aspx?relid=87915
[17]	Tahsin Ahmad and Joy Sen, Evaluating the Growth Potentials of Real Estate Market in Noida, International Journal of Advanced Research in Management and Social Sciences, 3 (6), June 2014, pp. 220-232.
[18]	Knight Frank, Financial Analysis of the Real Estate Companies, E&R@Glance March 2014 Retrieved from http://content.knightfrank.com/research/319/documents/en/financial-analysis-of-re-companies-2478.pdf on October 19, 2016.
[19]	Grant Thornton India LLP and CII, Emerging trends in real estate-India 2012, a study presented at 8th International Conference on Real Estate, New Delhi, 2012.
[20]	Deutsche Bank Research, Building up India: Outlook for India’s real estate markets, Germany, 2006.
[21]	Deutsche Bank Research (2006). Building up India: Outlook for India’s real estate markets, Germany. pp. 9-10.
[22]	ATKearney, Global Retail Expansion:Keeps On Moving, Global Retail Development Index 2012.(http://www.atkearney.com/documents/10192/302703/Global+Retail+Expansion+Keeps+On+Moving.pdf/4799f4e6-b20b-4605-9aa8-3ef451098f8a Retrieved on February 18, 2013.)
[23]	ATKearney, Global Retail Index 2012 (http://www.atkearney.in/consumer-products-retail/global-retail-development-index/past-report/-/asset_publisher/r888rybcQxoK/content/2012-global-retail-development-index/10192 Retrieved on December 28, 2016.).
[24]	NCAER, National Council for Applied Economic Research’s (NCAER), Centre for Macro Consumer Research, New Delhi, 2011. As given in The Economic Times daily, February 06, 2011. (http://articles.economictimes.indiatimes.com/2011-02-06/news/28424975_1_middle-class-households-applied-economic-research Retrieved on February 18, 2013.)
[25]	Times Property, Pune, August 27, 2011.
[26]	Economic Survey 2011-12, Govt. of India, p. 241.
[27]	Centre for Monitoring Indian Economy.
[28]	Centre for Monitoring Indian Economy, Industry Outlook.
[29]	Centre for Monitoring Indian Economy (January 2013). Indian industry: A monthly review.
[30]	CMIE, Economic Outlook. Data retrieved on February 12, 2013.
[31]	Press Note, Advance Estimates of National Income, 2011-12, Press Information Bureau, Government of India, February 07, 2012, p. 3.
[32]	The Economic Times daily, dated 7 February, 2012. Retrieved on February 12, 2013 from http://articles.economictimes.indiatimes.com/2011-02-07/news/28433672_1_capita-income-data-on-national-income-economy-at-current-prices

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APA Style

J. C. Edison. (2017). Financial Analysis of the Real Estate Industry in India. Journal of Business and Economic Development, 2(1), 44-56. https://doi.org/10.11648/j.jbed.20170201.16

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ACS Style

J. C. Edison. Financial Analysis of the Real Estate Industry in India. J. Bus. Econ. Dev. 2017, 2(1), 44-56. doi: 10.11648/j.jbed.20170201.16

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AMA Style

J. C. Edison. Financial Analysis of the Real Estate Industry in India. J Bus Econ Dev. 2017;2(1):44-56. doi: 10.11648/j.jbed.20170201.16

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@article{10.11648/j.jbed.20170201.16,
  author = {J. C. Edison},
  title = {Financial Analysis of the Real Estate Industry in India},
  journal = {Journal of Business and Economic Development},
  volume = {2},
  number = {1},
  pages = {44-56},
  doi = {10.11648/j.jbed.20170201.16},
  url = {https://doi.org/10.11648/j.jbed.20170201.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20170201.16},
  abstract = {The purpose of the study was to examine: (i) the relationship between real estate sector investment and GDP; and (ii) analyze the financial parameters of Indian real estate industry. Simple linear regression analysis was used to test the relationship between real estate sector investment and GDP. The results indicate a positive relationship between both the variables. Financial analysis was carried out by taking financial aggregates, financial ratios, ratios pertaining to margins on income, returns on investments and efficiency ratios of the real estate industry in India. The financial analysis of Indian real estate industry reveals that: (i) the real estate industry is yet to recover from recession; (ii) the profit generated during an accounting period against the total income generated was continuously declining during the recent years; (iii) operating profit is decreasing; (iv) returns on funds provided by its equity shareholders have declined considerably; (v) profitability as a ratio of capital employed is currently having a downward trend; there is a drastic slump in returns generated on the total funds deployed by it in the business; (vi) there is a drastic fall in returns that the Indian real estate industry generates on the fixed assets created by it; (vii) asset utilisation points out a trend of increase in expenditure; and (viii) able to give only a bare minimum amount of returns.},
 year = {2017}
}

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TY  - JOUR
T1  - Financial Analysis of the Real Estate Industry in India
AU  - J. C. Edison
Y1  - 2017/01/13
PY  - 2017
N1  - https://doi.org/10.11648/j.jbed.20170201.16
DO  - 10.11648/j.jbed.20170201.16
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 44
EP  - 56
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20170201.16
AB  - The purpose of the study was to examine: (i) the relationship between real estate sector investment and GDP; and (ii) analyze the financial parameters of Indian real estate industry. Simple linear regression analysis was used to test the relationship between real estate sector investment and GDP. The results indicate a positive relationship between both the variables. Financial analysis was carried out by taking financial aggregates, financial ratios, ratios pertaining to margins on income, returns on investments and efficiency ratios of the real estate industry in India. The financial analysis of Indian real estate industry reveals that: (i) the real estate industry is yet to recover from recession; (ii) the profit generated during an accounting period against the total income generated was continuously declining during the recent years; (iii) operating profit is decreasing; (iv) returns on funds provided by its equity shareholders have declined considerably; (v) profitability as a ratio of capital employed is currently having a downward trend; there is a drastic slump in returns generated on the total funds deployed by it in the business; (vi) there is a drastic fall in returns that the Indian real estate industry generates on the fixed assets created by it; (vii) asset utilisation points out a trend of increase in expenditure; and (viii) able to give only a bare minimum amount of returns.
VL  - 2
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Author Information

J. C. Edison

School of General Management, National Institute of Construction Management and Research, Pune, India

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APA Style

J. C. Edison. (2017). Financial Analysis of the Real Estate Industry in India. Journal of Business and Economic Development, 2(1), 44-56. https://doi.org/10.11648/j.jbed.20170201.16

Copy | Download

ACS Style

J. C. Edison. Financial Analysis of the Real Estate Industry in India. J. Bus. Econ. Dev. 2017, 2(1), 44-56. doi: 10.11648/j.jbed.20170201.16

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AMA Style

J. C. Edison. Financial Analysis of the Real Estate Industry in India. J Bus Econ Dev. 2017;2(1):44-56. doi: 10.11648/j.jbed.20170201.16

Copy | Download

@article{10.11648/j.jbed.20170201.16,
  author = {J. C. Edison},
  title = {Financial Analysis of the Real Estate Industry in India},
  journal = {Journal of Business and Economic Development},
  volume = {2},
  number = {1},
  pages = {44-56},
  doi = {10.11648/j.jbed.20170201.16},
  url = {https://doi.org/10.11648/j.jbed.20170201.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20170201.16},
  abstract = {The purpose of the study was to examine: (i) the relationship between real estate sector investment and GDP; and (ii) analyze the financial parameters of Indian real estate industry. Simple linear regression analysis was used to test the relationship between real estate sector investment and GDP. The results indicate a positive relationship between both the variables. Financial analysis was carried out by taking financial aggregates, financial ratios, ratios pertaining to margins on income, returns on investments and efficiency ratios of the real estate industry in India. The financial analysis of Indian real estate industry reveals that: (i) the real estate industry is yet to recover from recession; (ii) the profit generated during an accounting period against the total income generated was continuously declining during the recent years; (iii) operating profit is decreasing; (iv) returns on funds provided by its equity shareholders have declined considerably; (v) profitability as a ratio of capital employed is currently having a downward trend; there is a drastic slump in returns generated on the total funds deployed by it in the business; (vi) there is a drastic fall in returns that the Indian real estate industry generates on the fixed assets created by it; (vii) asset utilisation points out a trend of increase in expenditure; and (viii) able to give only a bare minimum amount of returns.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Financial Analysis of the Real Estate Industry in India
AU  - J. C. Edison
Y1  - 2017/01/13
PY  - 2017
N1  - https://doi.org/10.11648/j.jbed.20170201.16
DO  - 10.11648/j.jbed.20170201.16
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 44
EP  - 56
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20170201.16
AB  - The purpose of the study was to examine: (i) the relationship between real estate sector investment and GDP; and (ii) analyze the financial parameters of Indian real estate industry. Simple linear regression analysis was used to test the relationship between real estate sector investment and GDP. The results indicate a positive relationship between both the variables. Financial analysis was carried out by taking financial aggregates, financial ratios, ratios pertaining to margins on income, returns on investments and efficiency ratios of the real estate industry in India. The financial analysis of Indian real estate industry reveals that: (i) the real estate industry is yet to recover from recession; (ii) the profit generated during an accounting period against the total income generated was continuously declining during the recent years; (iii) operating profit is decreasing; (iv) returns on funds provided by its equity shareholders have declined considerably; (v) profitability as a ratio of capital employed is currently having a downward trend; there is a drastic slump in returns generated on the total funds deployed by it in the business; (vi) there is a drastic fall in returns that the Indian real estate industry generates on the fixed assets created by it; (vii) asset utilisation points out a trend of increase in expenditure; and (viii) able to give only a bare minimum amount of returns.
VL  - 2
IS  - 1
ER  -

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