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Rustomjee Business School

Dahisar (W)


To Study the Various factors that Influence Investors Perception
towards Real Estate Investments
A Research Dissertation Submitted in Partial Fulfillment for the
Award of the Degree of Masters of Management Studies

Submitted to:

Submitted by:

Dr Hanif Kanjer

Fahad A.Kapadia
MMS II Year Section


This is to certify that Fahad A.Kapadia of MMS (Full Time) Semester IV Studying in
Rustomjee Business School, Dahisar (W) has carried out a Major Research Project titled To
Study the Various factors that Influence Investors Perception towards Real Estate
Investments. The work done by him/her is genuine and authentic.
The work carried out by the student was found satisfactory. We wish him/her all the success in

Internal Examiner

External Examiner


This is to certify that Fahad A.Kapadia of MBA (Full Time) Semester IV Studying in
Rustomjee Business School, Dahisar (W) has carried out a Major Research Project titled To
Study the Various factors that Influence Investors Perception towards Real Estate
The work carried out by the student was found satisfactory and it is as per the guidance of faculty

Signature of Chairperson

Signature of Faculty Guide

I, Fahad A.Kapadia, a student of School of Management, Rustomjee Business School,
Dahisar (W) hereby declare that the work done by me to do the Major Research Project titled
To Study the Various factors that Influence Investors Perception towards Real Estate
Investments is genuine and authentic.

Signature of the Student


I sincerely and religiously devote this folio to all the gem of persons who have openly or
silently left an ineradicable mark on this research so that they may be brought into consideration
and given their share of credit, which they genuinely and outstandingly deserve.
This expedition of research encountered many trials, troubles and tortures along the way. I
am essentially indebted to my guide Vasanti Dutta for this sweating learning experience.
He/She overlooked my faults and follies, constantly inspired and mentored via his proficient
direction. It was a privilege to work under his/her sincere guidance.
I express my thanks to Dr Manoj Bhatia, Director (MBA / PGDM), Sanghvi Institute of
Management and Science, Indore for his considerate support whenever and wherever needed. I
honestly acknowledge the support provided by the Chairperson,

Prof Gaurav Singh.

I express my indebtedness to the management of Sanghvi Institute of Management and Science,

for inspiring us to grab and utilize this opportunity.
With profound sense of gratitude, I would like to truthfully thank a recognizable number of
individuals whom I have not mentioned here, but who have visibly or invisibly facilitated in
transforming this research into a success saga.
Above all, I would like to conscientiously thank the Omnipotent, Omnipresent and
Omniscient God for His priceless blessings

Signature of Student



Literature of Review
Rationale of study
Research Methodology
Data Analysis & Interpretation
Scope of Real estate
Factor Analysis

Investment is putting money into something with the expectation of profit. More specifically,
investment is the commitment of money or capital to the purchase of financial instruments or
other assets so as to gain profitable returns in the form of interest, dividends, or appreciation of
the value of the instrument.
Investment is involved in many areas of the economy, such as business management and finance
no matter for households, firms, or governments.
An investment involves the choice by an individual or an organization such as a pension fund,
after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as
property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign
asset denominated in foreign currency, that has certain level of risk and provides the possibility
of generating returns over a period of time. When an asset is bought or a given amount of money
is invested in the bank, there is anticipation that some return will be received from the
investment in the future.
Investment in Terms of Economics
According to economic theories, investment is defined as the per-unit production of goods,
which have not been consumed, but will however, be used for the purpose of future production.
Examples of this type of investments are tangible goods like construction of a factory
or bridge and intangible goods like 6 months of on-the-job training.
Investment in Terms of Business Management
According to business management theories, investment refers to tangible assets like
machinery and equipments and buildings and intangible assets like copyrights or patents and
Investment in Terms of Finance

In finance, investment refers to the purchasing of securities or other financial assets from the
capital market. It also means buying money market or real properties with high market liquidity.
Some examples are gold, silver, real properties, and precious items.
Financial investments are in stocks, bonds, and other types of security investments. Indirect
financial investments can also be done with the help of mediators or third parties, such as
pension funds, mutual funds, commercial banks, and insurance companies.
Personal Finance
According to personal finance theories, an investment is the implementation of money for buying
shares, mutual funds or assets with capital risk.

Types of Investment
Equities are a type of security that represents the ownership in a company. Equities are traded
(bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public
Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term
investment option as the returns on equities over a long time horizon are generally higher than
most other investment avenues. However, along with the possibility of greater returns comes
greater risk.
Mutual funds
A mutual fund allows a group of people to pool their money together and have it professionally
managed, in keeping with a predetermined investment objective. This investment avenue is
popular because of its cost-efficiency, risk-diversification, professional management and sound
regulation. You can invest as little as Rs. 1,000 per month in a mutual fund. There are various
general and thematic mutual funds to choose from and the risk and return possibilities vary
Bonds are fixed income instruments which are issued for the purpose of raising capital. Both
private entities, such as companies, financial institutions, and the central or state government and
other government institutions use this instrument as a means of garnering funds. Bonds issued by
the Government carry the lowest level of risk but could deliver fair returns.

Investing in bank or post-office deposits is a very common way of securing surplus funds. These
instruments are at the low end of the risk-return spectrum.
Cash equivalents
These are relatively safe and highly liquid investment options. Treasury bills and money market
funds are cash equivalents.
Non-financial Instruments
The 'yellow metal' is a preferred investment option, particularly when markets are volatile.
Today, beyond physical gold, a number of products which derive their value from the price of
gold are available for investment. These include gold futures and gold exchange traded funds.

Real Estate
In real estate, investment money is used to purchase property for the purpose of holding,
reselling or leasing for income and there is an element of capital risk.
Residential real estate
Investment in residential real estate is the most common form of real estate investment measured
by number of participants because it includes property purchased as a primary residence. In
many cases the buyer does not have the full purchase price for a property and must engage a
lender such as a bank, finance company or private lender. Different countries have their
individual normal lending levels, but usually they will fall into the range of 70-90% of the
purchase price. Against other types of real estate, residential real estate is the least risky.
Commercial real estate
Commercial real estate consists of multifamily apartments, office buildings, retail space, hotels
and motels, warehouses, and other commercial properties. Due to the higher risk of commercial
real estate, loan-to-value ratios allowed by banks and other lenders are lower and often fall in the
range of 50-70%.
According to real estate theories, investment is referred to as money utilized for buying property
for the purpose of ownership or leasing. This also involves capital risk.

Indian Real Estate Scenario

India is the seventh largest country by geographical area, the second most populous country and
the most popular liberal democracy in the world. India is now the fourth largest economy in the
world and the second fastest growing economy.
One of the noticeable recent developments has been in the field of Real Estate. India real estate
market is booming. Some 80,000 Indians today have liquid assests greater than 5 cores and this
No. is increasing by 13 % a year. According to well-known source Indias large cities boasts 400500 house listed at 5 crores+.
Indias emergence as a hub for global outsourcing and the consumption-driven growth of Indias
economy is contributing to its new found real estate investment image. For example upcoming
glitzy shopping malls, entertainment centers, luxury hotels and multiplexes.
Foreign Investment and the likes of Wal-Mart is already fuelling the demand for commercial
property. Foreign companies can set up subsidiaries or joint-ventures to develop property,
provided that their money is locked in for three years and that plots are of at least a minimum
However, Indias property market remains unorganized and underdeveloped. This creates risks
for investors. In the absence of clear title to property, the risk of litigation is high. For those
foreigners who invest in India via real estate investment trusts, there are no rules on the marking
of their stakes to market or on whether they must pay stamp duty on transactions.
The growth was initially fuelled and subsequently sustained mainly by cheap housing loans.
Years ago, when India was a closed economy with lots of government control and intervention,
the interest rates for house loan used to be as high as 18% per annum. But the gradual
liberalization of the Indian economy and opening up of the domestic market, unrestricted flow of
FDI and full current account convertibility of Indian currency (Rupee) brought down the PLR
(prime lending rate) substantially.

Also there has been an increase in the income level of Indian middle class who are now
considerably investing in new property in prime metro cities like Delhi, Mumbai, and Bangalore.
Several mega projects offering international lifestyles are on the anvil in different cities in India.
The most developed are the Bangalore Property, Mumbai Property and Delhi.For example
Property market with luxury apartment and villas selling like hot cakes.
The Indian stock market and Indian real estate are quite related. The stock market has been
witnessing a nonstop bull run for an unusually long time. During last couple of years share prices
have gone beyond all expectations.
One can draw parallels between that and Japans real estate crash in 1991. Prior to the crash, both
the stock market and the property market were on fire. Profits from the stock markets used to be
transferred to the property market, and vice versa. The same thing is happening in India as
well.Several mega projects offering international lifestyles are on the anvil in different cities in

Types of Real Estate Properties

Real estate property comes in various types with each having its own distinctive structure. There
are three major property types in the real estate business.
1.Vacant Land Property
Vacant land is popular with ranchers and cultivators. The extent of property is considerable and
the price high.
2.Residential Properties
Residential property types include:
2.1Single Family Residence Property
Single-family residences are single units, typically with a front and back yard, a driveway
and an attached garage.
2.2.Duplex Property

A duplex is a structure designed for residential use and contains two living blocks sharing
a common wall. Duplex properties may be listed residential or commercial, depending on
the purposes they serve.
2.3.Condominiums Property
Condominiums, or condos, are apartments that are independently owned minus a yard
and with common parking facilities and offer many amenities.
2.4.Town House Property
Classic townhouses are doubled storied row of homes, with common sidewalls. The
living room is situated below with the bedrooms above and there is a little fenced in yard.

2.5.Manufactured Home Property

Manufactured homes are erected in a factory and set up on the dwelling site. They must
conform to the federal construction regulations.
2.6.Patio Home
A patio home is a single story home with one joint sidewall and a patio towards the back
facing the common area. Patio homes normally contain 2-4 homes in each structure and
may have a backyard.
2.7.Loft Property
Lofts are usually found downtown and have high roofs, huge wide windows, metal
staircase and cement floors, but no yard.
3.Commercial Properties
Commercial property can refer to vacant land developed for commercial use, or an
already existing commercial structure(s).
Specifics about certain commercial property types:
3.1.Multi-Family Property
Multi-family property comprises of buildings meant for numerous family groups, leased
on a permanent basis. They typically contain five or more living units with shared
amenities, such as doorways, foyers, lifts, staircases and walkabouts.
3.2.Rooming House

Rooming house properties usually have no more than 20 furnished units with common
bathroom and kitchen facilities given out on a temporary basis.
3.3.Mobile Home Parks Property
Mobile park homes are a blend of single and double spacious homes, sited in decent
neighborhoods and with at least three-fourth occupancy. Depending on the surroundings
and facilities provided mobile home parks are given star ratings.
3.4.Retail Space
Retail space comprises of single construction taken by single or multiple tenants and
exclusively meant for retail use such as sales and display of garments and electronics.
3.5.Office Buildings & Complexes
This type refers to a single structure intended for office use, or a set of offices in one
structure or a group of buildings and are ideally located on the main road.
3.6.Mixed-Use Properties
Mixed-use properties are a blend of residential and commercial units such as a retail store
and a multi-family home in the same structure.
3.7. Healthcare Properties
This property type includes hospitals and nursing homes, health care centers and assisted
living facilities. A license is mandatory to run the facility.
3.8.Bed & Breakfast Properties
Bed and Breakfast inns are normally single buildings family units meant for temporary
3.9.Restaurant Property
Restaurants are built for the making and selling of food and drinks, and include canteens,
pubs, and inns.
3.10.Hotel Properties
Hotel properties are constructions that provide a suite of facilities and services, typical of
the hospitality industry. Hotels are classified as either Complete Service or Restricted
Service. Hotels can also be affiliated to a national franchise chain.
3.11.Day Care Centers

Day Care centers provide childcare, disabled, and elderly care services; or are learning
centers, such as kindergartens and nurseries. They have playrooms, rest rooms, and
simple kitchen amenities.
4.Industrial Property
Industrial property types are designed for industrial commercial functions. They include:
4.1. Self-Storage Properties
These are mini-warehouses and comprise of tiny compartments that are rented for private
4.2. Warehouse Properties
Warehouses are commercial buildings built for holding goods and consist of massive
open inner sections.
4.3.Flex Space Properties
Flex space is a blend of industrial and office property. It is an arrangement that has a
workplace and display area together with the industrial area.
5. Manufacturing Property
Manufacturing property is designed for producing goods for sale or lease like factories.
5.1.Cold Storage Property
Cold storage property is a specialized structure that makes available storage in a chilled
or icy setting.
5.2.Automotive Property
Automotive structures are built specifically for the automobile industry and usually have
a small office cubicle, car lifts, and overhead doors. They include repair units, used car
hubs, and tier fixing facilities. Detailed study of property types and their comparative
values is crucial in deciding the best option to work with and the possible monetary
benefits accruing from each.

Investment properties pros & cons

In general, property is considered a fairly low-risk investment, and can be less volatile than
shares (although, this is not always the case). Some of the advantages of investing in property
1. Tax benefits

A number of deductions can be claimed on your tax return, such as interest paid on the loan,
repairs and maintenance, rates and taxes, insurance, agent's fees, travel to and from the property
to facilitate repairs, and buildings depreciation.
2. Negative gearing
Tax deductions can also be claimed as a result of negative gearing, where the costs of keeping
the investment property exceed the income gained from it.
3. Long-term investment
Many people like the idea of an investment that can fund them in their retirement. Rental
housing is one sector that rarely decreases in price, making it a good potential option for longterm investments.

4. Positive asset base

There are many benefits from having an investment property when deciding to take out another
loan or invest in something else. Showing your potential lender that you have the ability to
maintain a loan without defaulting will be highly regarded. The property can also be useful as
security when taking out another home, car or personal loan.
5. Safety aspect
Low-risk investments are always popular with untrained "mum and dad" investors. Property fits
these criteria with returns in some country areas reaching 10% per year. Housing in
metropolitan areas is constantly in demand with the high purchase price being offset by
substantial rental income and a yearly return of between 6% and 9%.
6. High leverage possibilities
Investment properties can be purchased at 80% LVR (loan to valuation ratio), or up to 90% LVR
with mortgage insurance. The LVR is calculated by taking the amount of the loan and dividing
it by the value of the property, as determined by the lender. This high leverage capacity results
in a higher return for the investor at a lower risk due to having less personal finances ties up in
the property (80% of the purchase price was provided by the mortgagee).
By choosing a property intelligently, investors can make this form of investment work for them.
However, as with all investments there are some disadvantages to be aware of.

Disadvantages of investment properties

1. Liquidity
It's true; you can sell the property if things go bad. However this can take many months unless
you're willing to accept a price less than the property is worth. Unlike the stock market, you will
have to wait for any financial rewards.
2. Vacancies
There will be times when mortgage payments will need to be covered out of your own pocket
due to your property being untenanted. This could just be a result of a gap between tenants or
because of maintenance issues.
3.Bad tenants
It's every investment property owner's worst nightmare: problem tenants. They can significantly
damage your property, refuse to pay rent and refuse to leave. Disputes can sometimes take
months to resolve.

4. Property oversupply
In recent years, inner-city builders have created a glut of high-rise apartment blocks, resulting in
fierce competition and many units being increasingly difficult to rent out.
5.Ongoing costs
In addition to the standard costs associated with a property, ongoing maintenance costs,
especially with an older building, can be substantial.
6. Putting all your eggs in one basket
If you have all your money tied up in property, overexposure to one particular type of investment
can be a dangerous thing. If the property market crashes you can stand to lose significantly.
7. Capital Gains Tax
It is imposed by the Federal Government on the appreciation of investments and payable on
8. Other costs

Negative gearing may offer tax deductions each financial year, however ongoing payments to
cover the shortfall need to be budgeted for every month. Also, costs involved in purchasing and
disposing of the property can be substantial.

Factors Affecting Investment

1.Management Outlook
If the management is progressive and has an aggressively marketing and growth outlook, it will
encourage innovation and favor capital proposals which ensure better productivity on quality or

2. Frequency of return
The frequency with which the individual gets return on his investment is also very important.
These have to be very carefully followed for efficient reinvestment and also for the use of the
returns for various needs of the individual.
The investor has to understand the needs to have money in hand for either an emergency or even
a sudden change in investment strategy to earn a high rate of return on the investment.
4. Inflation
Each of the persons investments have to beat the inflation rate present at that time for the return
on investment to be positive. If the inflation rate is more than the return on the investment of a
person, then the return is negative when inflation is taken into consideration. Any investment has
to beat the inflation to be efficient.
5. Rate of Return
The main reason for people investing money is to earn a high return on the investment. An
individual may have various investments. Some may be fixed investments and others may be
high risk equity investments.
6. Age and risk taking ability:
All investment and insurance needs changes based on stage of life. Younger are able to invest in
every field and able to taking risk but in old age every investor wants to invest in securities.

7. Investment horizon
The length of time a sum of money is expected to be invested. An individual's investment
horizon depends on when and how much money will be needed, and the horizon influences the
optimal investment strategy. In general, the shorter the investor's horizon, the less risk he/she
should be willing to accept.

Sources and acquisition of investment property

Real estate markets in most countries are not as organized or efficient as markets for other, more
liquid investment instruments. Individual properties are unique to themselves and not directly
interchangeable, which presents a major challenge to an investor seeking to evaluate prices and
investment opportunities. For this reason, locating properties in which to invest can involve
substantial work and competition among investors to purchase individual properties may be
highly variable depending on knowledge of availability. Information asymmetries are
commonplace in real estate markets. This increases transactional risk, but also provides many
opportunities for investors to obtain properties at bargain prices. Real estate investors typically
use a variety of appraisal techniques to determine the value of properties prior to purchase.
Typical sources of investment properties include:

Market listings (through a Multiple Listing Service or Commercial Information


Real estate agents

Wholesalers (such as bank real estate owned departments and public agencies)

Public auction (foreclosure sales, estate sales, etc.)

Private sales
Once an investment property has been located, and preliminary due diligence (investigation and
verification of the condition and status of the property) completed, the investor will have to
negotiate a sale price and sale terms with the seller, then execute a contract for sale. Most
investors employ real estate agents and real estate attorneys to assist with the acquisition process,
as it can be quite complex and improperly executed transactions can be very costly. During the
acquisition of a property, an investor will typically make a formal offer to buy including payment
of "earnest money" to the seller at the start of negotiation to reserve the investor's rights to
complete the transaction if price and terms can be satisfactorily negotiated. This earnest money
may or may not be refundable, and is considered to be a signal of the seriousness of the investor

to purchase. The terms of the offer will also usually include a number of contingencies which
allow the investor time to complete due diligence and obtain financing among other requirements
prior to final purchase. Within the contingency period, the investor usually has the right to
rescind the offer with no penalty and obtain a refund of earnest money deposits. Once
contingencies have expired, rescinding the offer will usually require forfeit of earnest money
deposits and may involve other penalties as well.

Sources of investment capital and leverage

Real estate assets are typically very expensive in comparison to other widely-available
investment instruments (such as stocks or bonds). Only rarely will real estate investors pay the
entire amount of the purchase price of a property in cash. Usually, a large portion of the purchase
price will be financed using some sort of financial instrument or debt, such as a mortgage loan
collateralized by the property itself. The amount of the purchase price financed by debt is
referred to as leverage. The amount financed by the investor's own capital, through cash or other
asset transfers, is referred to as equity. The ratio of leverage to total appraised value (often
referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure
of the risk an investor is taking by using leverage to finance the purchase of a property. Investors
usually seek to decrease their equity requirements and increase their leverage, so that their return
on investment (ROI) is maximized. Lenders and other financial institutions usually have
minimum equity requirements for real estate investments they are being asked to finance,
typically on the order of 20% of appraised value. Investors seeking low equity requirements may
explore alternate financing arrangements as part of the purchase of a property (for instance, seller
financing, seller subordination, private equity sources, etc.)
Some real estate investment organizations, such as real estate investment trusts (REITs) and
some pension funds, have large enough capital reserves and investment strategies to allow 100%
equity in the properties they purchase. This minimizes the risk which comes from leverage, but
also limits potential ROI.

Risk management
Management and evaluation of risk is a major part of any successful real estate investment strategy. Risk occurs in
many different ways at every stage of the investment process. Below is a tabulation of some common risks and
typical risk mitigation strategies used by real estate investors


Mitigation Strategy

Fraudulent sale
Adverse possession

Verify ownership, purchase title insurance

Obtain a boundary survey from a licensed

Environmental contamination








Building component or system failure

contaminants, etc.)
Complete full inspection prior to purchase,

Building component or system failure

perform regular maintenance

Obtain third-party appraisals

Overpayment at purchase

discounted cash flow analysis as part of the



investment pro forma, do not rely on capital

appreciation as the primary source of gain for the
Cash shortfall

Economic downturn
Tenant destruction of property
Underestimation of risk

Market Decline
Fire, flood, personal injury
Tax Planning

Maintain sufficient liquid or cash reserves to
cover costs and debt service for a period of time,
Purchase properties with distinctive features in
desirable locations to stand out from competition,
control cost structure, have tenants sign long term
Screen potential tenants carefully, hire
experienced property managers
Carefully analyze financial performance using
conservative assumptions, ensure that the
property can generate enough cash flow to
support itself
Purchase properties based on a conservative
approach that the market might decline and rental
income may also decrease
Insurance policy on the property
Plan purchases and sales around an exit strategy
to save taxes.

Scope of Real Estate

In India, small real estate investors currently do not have as much scope as institutional
investors. They can hold multiple properties, but banks will generally not fund beyond a second
home loan.
That does not mean they cannot invest beyond that from their personal accruals. They certainly
have the option of investing in rent-generating assets, which can fetch very decent returns if they
have been purchased wisely.
Despite the present limitations for small investors, a property investment can give the buyer
protection against inflation. Like gold, real estate tends to retain its intrinsic value. However,
unlike with gold, it is possible to earn a regular income on it.


Sullivan and Ross (1999) the senior investment market is expanding as a large segment of
investors. Age is predictive of investment clients' attitudes and behavior. They concluded that
older clients tend to be frugal, regard investing in the stock market as an emotionally threatening
experience, and want firm recommendations from their financial advisors. Kaplan (1999)
indicated that most seniors want help and information in order to understand their investment
choices. Different asset allocations have been recommended across age groups (Stovall, 1997).
Likewise, Weil (1999) and Bakshi and Chen (1994) investigated life-cycle investments. Less risk
was recommended for older investors. Moreover, the literature seems to suggest that
conservative investing and guidance from the financial advisor are needed for older clients.
Greco (1991), Marsh (1998), and Schumell (1996) that the women's investment market is
increasing although men have traditionally controlled most of the wealth but women's financial
holdings are on the rise. Smith Barney noted that the percentage of women clients jumped from
28% in 1995 to 40% in 1997. Marsh, 1998; Schumell, 1996). Greco (1991) and West (1996)
reported that women are often unprepared to manage finances. They need education and want to
trust and learn from their investment advisor. Women may also be more cautious and trade less
than men (Barber &Odean, 2001). Thus, the women's market may require substantial time and
service from financial advisors and brokers.

Wang (1994) according to this study, sales representatives at brokerages take female investors
less seriously than men. The brokers studied tended to spend more time with men and
recommend higher risk and return investments to men. Jacobius (2001) reported that women are
less involved with their retirement accounts than are men. Conversely, Friedman (1996)
contended that baby boomers and women are gaining financial sophistication. Women are
developing the ability to distinguish between levels of investment service quality. Inadequate
broker attention and recommendations could lead to dissatisfaction on the part of knowledgeable
women clients, which in turn may cause brokers to lose clients from this market segment.
Shukla Ravi (2004), analyses the value of interim portfolio revision, an integral component of
active management of mutual funds by comparing the returns on actively managed mutual fund
portfolios with the returns the fund portfolios would have earned had there been no interim
revision. The results show that, on an average, excess returns from interim portfolio revision do
not cover the incremental trading costs, even over holding periods as long as 6 months. Across
mutual funds, we find evidence of a positive relationship between the excess returns and mutual
fund expense ratios suggesting that those managers who generate higher excess returns charge
higher fees from the stockholders.
Robert A. Olsen , 2001, O'Barr and Conley according to the author this article suggests that, even
with equivalent training, experience and information, investment managers make different
decisions based on identifiable cultural differences. This study focuses on professional men and
women investment managers who perceive and respond to risk differently. Author suggests
cultural factors may be responsible for this risk related gender effect. There is extensive evidence
that when faced with social and technological hazards, women are more risk averse than men.
Tahira K. Hira and Cazilia Loibl,2008, Gender Differences in Investment Behavior The
objectives of this chapter are to identify significant personal and environmental factors that
influence investment behavior and to specify the investment decision-making process,
particularly with respect to female investors. It is expected that the results presented here will
help readers to consider new approaches to investment education. Specifically, this chapter aims
to: (a) explore differences between men and women in a variety of financial behaviors,

investment decision-making process; (b) identify patterns of investment involvement and

learning preferences; and (c) determine socio-economic and behavior factors that explain gender
differences in specific investment behavior (portfolio diversification).
According to Ronald &lisa (1998) This paper examines the extent to which real estate returns are
driven by continental factors. This subject is relevant for determining the country allocation of
international real estate portfolios. If returns are driven by a continental factor, investors should
look for diversification opportunities outside their own continent. This paper finds strong
continental factors in North America and especially in the United States. For the AsiaPacific
region, real estate returns are not driven by a continental factor. The results suggest that, for
European, North American and AsiaPacific real estate portfolio managers, the AsiaPacific
region provides attractive international diversification opportunities.
According to Robert A. Nagy and Robert W. Obenberger (1994) Previous studies of retail
investor behavior have examined motivation from economic perspectives or studied relationships
between economic and behavioral and demographic variables. Examination of the various utilitymaximization and behavioral variables underlying individual investor behavior provides a more
comprehensive understanding of the investment decision process. These variables can be
grouped into seven summary factors that capture major investor considerations. Data collected
from a questionnaire sent to a random sample of individual equity investors with substantial
holdings in Fortune 500 firms reveal that individuals base their stock purchase decisions on
classical wealth-maximization criteria combined with diverse other variables. They do not tend
to rely on a single integrated approach.


There are various segments of investors according to age, occupation, annual income etc.
Different type of investors wants to invest indifferent sectors such as gold, insurance policies,
mutual funds, silver, , national saving certificate, fixed deposit, real estate etc. The real estate
investor has a bit more control over the risks to that cash flow also and property is considered a
fairly low-risk investment, and can be less volatile than shares. This research will help us to

understand investors perception toward the real estate investments. And the factors in which
attention should be focused to increase number of investors in real estate.


To Study the factors Influencing Real estate Investment decisions.

The present research is to be conducted on a sample of 100 prospective customers.
Population: Our populations are the investors of real estate in Mumbai.
Sample Size: We have used a small number of items or a small portion of a population to draw
conclusions regarding the whole population. Our sample size is 100 respondents.

Collection of Data
As there are several research techniques, there are a number of data collection methods as

Secondary Data- A secondary data is concerned with the analysis of already existing
data that is related to the research topic. We have gathered data from books, journals,
articles, through internet.

Primary Data- Primary data is that data which is collected directly from respondents
using data collection methods like survey interviews, questionnaires, direct observation,
or charts. We have collected primary data through questionnaires.

For the analysis of the data collected, various statistical tools as well as SPSS software
was used as per the requirements.

In spite of every care taken on the part of the researcher there are certain limitations which could
not be overcome:

Sample size is limited to 100 customers and may not adequately represent the whole


The research is confined to a certain part of Indore.

The above are some of the aspects which posed real problems in the way of completion of the
research work but the majority of respondents were cooperative.

Data Analysis & Interpretation

Graph Analysis
The present research is conducted on a sample of 100 of prospective customers. The brief
diagrammatic descriptions of each of respondents are as follow:Q1. Are you interested to invest money in Real Estate?



Strongly Agree


Strongly Disagree

After study we found that 0% investors are strongly disagree, 8%people are disagree, 22%people
are neutral, 38%people are agree and 32%people are strongly agree with the statement.

Q2. Investment based on profit percent?


5% 1%


Strongly Agree


Strongly Disagree

After study we found that 1% investors are strongly disagree, 5%people are disagree, 15%people
are neutral, 49%people are agree and 30%people are strongly agree with the statement.
Q3. Real Estate is better option for investors?

8% 3%


Strongly Agree


Strongly Disagree

After study we found that 3% investors are strongly disagree, 8%people are disagree, 32%people
are neutral, 35%people are agree and 22%people are strongly agree with the statement.

Q4. Real Estate investment giving high return.




Strongly Agree


Strongly Disagree

After study we found that 0% investors are strongly disagree, 12%people are disagree,
24%people are neutral, 32%people are agree and 32%people are strongly agree with the

Q5. Real Estate investment is safe investment?

15% 1%


Strongly Agree



Strongly Disagree

After study we found that 1% investors are strongly disagree, 15%people are disagree,
23%people are neutral, 40%people are agree and 21%people are strongly agree with the

Q6.Location influences the investors perception towards the investment?

4% 4%


Strongly Agree


Strongly Disagree

After study we found that 4% investors are strongly disagree, 4%people are disagree, 23%people
are neutral, 30%people are agree and 39%people are strongly agree with the statement.

Q7. Price play important role in Real Estate investment?

7% 2%


Strongly Agree


Strongly Disagree

After study we found that 2% investors are strongly disagree, 7%people are disagree, 16%people
are neutral, 45%people are agree and 30%people are strongly agree with the statement.

Q8. Economy growth affects the Real Estate investment?

12% 2%


Strongly Agree



Strongly Disagree

After study we found that 2% investors are strongly disagree, 12%people are disagree,
30%people are neutral, 26%people are agree and 30%people are strongly agree with the
Q9. Volatile market affected investment decision in Real Estate.



Strongly Agree



Strongly Disagree

After study we found that 11% investors are strongly disagree, 20%people are disagree,
26%people are neutral, 23%people are agree and 20%people are strongly agree with the

Q10. Real Estate is low risk investment?




Strongly Agree



Strongly Disagree

After study we found that 1% investors are strongly disagree, 19%people are disagree,
24%people are neutral, 38%people are agree and 18%people are strongly agree with the
Q11. Interest rate have major impact on the Real Estate Investment?




Strongly Agree


Strongly Disagree

After study we found that 0% investors are strongly disagree, 11%people are disagree,
23%people are neutral, 46%people are agree and 20%people are strongly agree with the

Q12. Government policies affect the Real Estate investment?




Strongly Agree



Strongly Disagree

After study we found that 8% investors are strongly disagree, 18%people are disagree,
17%people are neutral, 34%people are agree and 23%people are strongly agree with the
Q13. Tax benefit is a very important aspect when a person invests his money.





Strongly Agree


Strongly Disagree

After study we found that 7% investors are strongly disagree, 10%people are disagree,
14%people are neutral, 45%people are agree and 24%people are strongly agree with the

It can be concluded from the study that factors which can influence the decision regarding real
estate investment are divided into five different groups and first group include four factors which
highly affect the real estate investment decision. These are better option, Price, Volatile Market,
and Government Polices. Most of the investors depend upon it. Second group also have four
factors which affected the investors perception less than first group. These factors are Tax
Benefit, Interest Rate, Location and Profit Percent. The third group is low affective then the
second group. This group have only two factors. These are Low Risk and interest.Only two
factors are present in fourth group that is safe investment and economic growth. Data analysis
result shows that these factors are moreaffective in Real Estate investment. Group five have only
single factor High Return. This has negligible affect because most of the investors know that it is
possible only in long term investment. All the factors affects investment decision but economic
growth and safe investment factor are more affective towards the real estate investment decision.
For investors, a property investment can give the protection against inflation.From the research
study It can beconcludedthat Real estate is a great investment option. It can generate an ongoing
income source. It can also rise in value overtime and prove a good investment in the cash value
of the home or land that you buy. However you need to be sure that you are ready to begin
investing in real estate.

Books Referred:

Dr. Jai Narain Sharma, The discipline and its Dimension, Deep & Deep Publications Pvt.
Ltd., New Delhi.

R. Panneersevam, Prentice-Hall of India Pvt. Ltd, New Delhi, 2008.

Dr. S. Shajahan, Research Methods for Management, 2nd Edition, 2004.


Search Engines:

We are approaching you with this questionnaire to know your Perception towards the Real Estate
investment. The information provided by you would be kept confidential and will be used for
academic purpose only. Kindly tick your choice against each statement.
Name : ___________________________________________________________
Gender : __________________________________________________________
Age : ____________________________________________________________
Qualification : _____________________________________________________
Income Status : ____________________________________________________


Are you interested to invest
money in Real Estate
Investment based on profit
Real Estate is better option for
Real Estate investment giving
high return
Real Estate investment is safe
Location influence the investors
perception towards investment
Price play important role in Real
Estate investment
Economy growth affect the Real
Estate investment.
investment decision in Real
Real Estate is low risk







Interest rate have major impact

on the Real Estate investment
Government policies have a
important affect to invest in
Real Estate.
Tax benefit is a very important
aspect when a person investshis