1. Drivers for Future Growth Ramesh Nair March 23 rd 2007

2. Family & Local Play Single Asset Type Play Mono / Oligopolies per city Decisions – based on “Gut” Pre – sell formula Finance – “Traditional” No Secondary Market Debt support limited Traditional Metrics The Real Estate Industry in India… Emerging Metrics “Corporatisation” Tier II / Multi City Growth Portfolio Approach Increasingly Multi player Decisions – Research based Increasing Pvt Equity interest Finance – Structured REITS / MF to emerge.

3. Industry Overview – The Growth Factors Growth SectorsOffice space (IT and BPO) Residential (Increased Homeownership) Retail Malls (Increased spending power) Growth Numbers30 m sft leased in commercial Office space in 2006 US$ 22b Market (2006) Annual Growth rate of 30% 200 new malls being developed Growth CentresDelhi, Mumbai, Bangalore, Chennai, Hyderabad and Pune Emerging Tier 3 cities Growth Enablers  I. T Policies and government support (business continuity)  STPI/SEZ (admin convenience)  Talent and network reliability (quality and cost)  Real Estate (quality, cost and administrative convenience) Real Estate Trends  Peripheral relocation  Demand for built to suit  Quality and configuration of space is on the rise.

4. Initiatives required from the government *SOURCE - CRISIL FDI in retail Clear SEZ policy Integrated City planning Township Development Relax FDI norms Change Legal System More govt land for devpt Computerisation of records Create clusters More PPP’s Township Development Invest in infrastructure Improve Public Transportation Faster approvals

5. Less of these…

6. More of these…

8. Global Megatrends  Demography is destiny  Globalisation  Urbanisation

9. Conventional Wisdom vs Visionary Alternative Slums are natural, they are inevitable Slums are created artificially, needlessly Space is scarce; so, only a minimal space should be allowed even for the rich Only when the rich get large spaces can the poor hope to get their due Rural-urban migration is inevitable Rural-urban migration is unnecessary Capital creates jobs Employers create jobs Rural poor will migrate to cities only Rural poor follow wherever employers go Employers like only CBDs Basically, employers seek connectivity only Cities alone can supply large connectivity Dedicated bus lanes linking a loop of villages can provide similar connectivity Business must be at the city centre and residences far off at the periphery Businesses can be distributed around the loop and located close to residences Space is scarce, hence expensive. So, poor can have slums only Space is in surplus; so, land prices can be made low enough for the poor to afford

10. Need for a Strategy  Past strategies wont carry you through the next decade.  Before developing an effective strategy ask:  What’s happening in the industry?  What’s my position in the industry?  Some companies do better that others irrespective of industry.  Competitive forces include existing competition, new entrants, bargaining power of suppliers, tenants and investors.

11. Current Issues  Current success based on a very favorable environment.  Entry barriers low, so a lot of new competition coming in.  Development for a fee is emerging.  Investors backward integrating to become developers.  Real estate advisors helping increase landlord returns.  Tenants, investors and suppliers becoming smarter and more sophisticated.  Most developers still doing deals without a strategy.

12. Future - Focus  Have a sustainable competitive advantage.  Cost or differentiation.  Cost: Finance, develop and deliver at a lower cost.  Differentiation: Unique skills that help in premium pricing.  Decide on scope – project, location and tenant.  Different industries vary in profitability and its hard to have a competitive advantage in everything.

13. THANK YOU