1 23rd March, 2007 LIC HOUSING FINANCE LTD

2 Factors Influencing the Real Estate Sector  Shift from Unorganised to somewhat organised sector  Higher lever of Transparency & Accountability  Socio Demographic Changes  Increased Urbanisation  Higher Disposable Income  Property as “Investment”  Economic Growth Leading to Spur in Demand

3 Factors Influencing the Real Estate Sector  Tax Incentives  Spur in service Industry linked demand like IT & ITes  Retail Boom (Malls & Multiplexes)  Interest from overseas investors  Positive Regulatory Steps

4 Real Estate - Developer’s perspective  Favorable demand climate  Low entry barriers  Relatively unregulated sector  Financial flexibility (Availability of funds)  Supportive Govt. policies (Like SEZ STP etc)  Intense Competition

5 Real Estate Finance – Institution’s perspective  Lucrative and well performing segment of the economy  Innovative Product mix (Lending options)  Holistic service providers rather than mere lender  Increasing complexity of deals  Need for clear strategic vision from developers  Good processes and systems

6 Real Estate - Regulator’s perspective  Protection of Consumer  Transparency from Developers and Financing Institution  Over –heating and consequent impact on prices and overall financial market  Over –exposure by lending institution  Self regulation by industry body (CREDAI etc.)  Misuse of Govt. Policy and Support (SEZ?)

7 Shift in Real Estate Investment from tier I to Tier II & Tier III cities  Availability of comparative cheap labour pool  Reasonably good infrastructure  Suitable and reasonable real estate options (Large parcel of land availability)  Business and social environment changes  Sector Specific Demand (Like IT & ITes due to cost advantage)

8 Evolution of Housing Finance  LIC of India – Loans to Policyholders since the 1960s  Housing Development Finance Corporation (HDFC) – 1977  National Housing Bank Act – 1987  LIC Housing Finance Ltd – 19 th June, 1989  Industry was dominated by HFCs –mainly HDFC & LICHFL till late 1990s  In 1998, RBI allowed PSU Banks to lend directly in the retail segment.

9 Evolution of Housing Finance Disbursements to be around Rs. 1,00,000 cr in with Banks contributing to more than 60%

10  Acute shortage of dwelling units in India Source : NBO E2005E Million Units Shortfall Growth Drivers

11 Growth Drivers City E2025E Mumbai Kolkata New Delhi Chennai Hyderabad By 2016, total population to touch 126 cr with 33 % being Urban Population  Population growth & changing lifestyles - Growth of mega cities Population in cr Government adopts the National Housing & Habitat Policy in 1998

12 Growth Drivers  Migration of population - Total population of the country increased by 21% between , whereas urban population grew by 31% Source: The Census 2001, Tenth Five Year Plan Percentage of Urban Population

13 Future Growth Drivers Source : NCAER & CRISINFAC Middle & Upper Middle Class Households to grow from 54% to 74% by

14 Emerging Trends Increase in Home Ownership Rate Declining Age of Borrower

15 Industry Outlook Steady growth projections for the Industry Source : CRISINFAC Report on Retail Finance, March 2005

16 Mortgage & GDP India has one of the lowest mortgage penetration rates in the world Source : Federation of Indian Chamber of Commerce & Industries (FICCI) – Survey on Housing Finance, 2003

17 Balancing Factors  Affordability  Increasing cost  Withdrawal of Section 80IB of the IT Act  Reduction in amount transferrable under Section 36(1)(viii) of the IT Act

18 Thank You