Master Sun Consulting Business Opportunity Evaluation

Need for One-Stop Shop in Real Estate

Opportunity Development and Asset Management NRI & HNI : Vacation Home s Middle Class : Sales & Marketing Conclusions

Opportunity

Economy growing at least 7-8 % per annum Unorganized & fragmented real estate sales & marketing channel Growing affluence and investment appetite fuelling the concept of Vacation Home for lifestyle and investment needs

Demand for world class development

Growing asset management & development opportunity for budget hotels and service apartments

Target Consumers
Rich
Urban Population 10%

1.6 million luxury consumers 6-7 million very affluent 9-10 mid affluent 11-12 million mass affluent

50% 40%

Middle Class

40 million upper middle class 72 million up graders

Bottom of the pyramid

Middle Class

Rich

Bottom of the pyramid

140 million bottom of the pyramid

Opportunity Development and Asset Management NRI & HNI : Vacation Home s Middle Class : Sales & Marketing Conclusions

Land Development Value Chain

Value (example)

Vacant Land Concept, plans, approvals, financial models, business plans etc Developable Land

Rs 50 Cr

Rs 200 Cr

Infrastructure (if required)

Pre-construction Land Construction finance, Contractors, Project Management, pre-sales Completed Project

Rs 250 Cr

Rs 1000 Cr

Land Development Process

Market research World class architects Financial analysis Design brief PRE-CONSTRUCTION

Design and concept

Marketing plan

Modelling and forecasting Building approvals Detailed plans Asset management

Business plan

Fundraising agent Project management Sales and marketing

Fundraising

Construction

Realisation

Self

Outsourced

Development Snapshot

Customers : Landowners Initial Value Proposition Maximize the value of asset Sustainable Value Proposition Market based concepts ROI Quality of Development World class design Case studies

Development Methodology Pre-Construction

Financial analysis

What options are there and which is most profitable? Differentiated product able to sell your product in a crowded market Delivering what the market wants = building a brand Price premium and faster sales rates = more profit and less risk

Benefits of doing this are

Then, translating this concept into a site plan and design A collaborative effort between Promoters, we and panel architects.

Development Methodology Business Plan

BUSINESS PLAN = Who is going to do what to make this project work?

How are we intending to SELL what we build? Who will construct it? Who will oversee construction? What is the operational and marketing plan? How much money do we expect to make and what funds do we require? How will we manage the risks of the project?

Requires decisions on branding and marketing strategy. Need full business plan in order to proceed to fundraising .

Development Methodology Design Brief

NOT what can I build? but what can I sell? DESIGN BRIEF = What are you going to build and why? Market research

Not just a matter of ordering a report, it needs to be properly analysed Need to consider the potential audience for the development and how to reach them. Need to understand market depth and likely acceptance of concept Need hard data (market research) and soft data (customer research) Need to identify price points, user preferences, demographics, competitive analysis, required features, value drivers etc.
What options are there and which is most profitable? Differentiated product able to sell your product in a crowded market Delivering what the market wants = building a brand Price premium and faster sales rates

Financial analysis

Benefits of doing this are

= more profit and less risk

Development Methodology Construction & After

As your development partner, we will provide services as required during the construction and asset management / exit phases. These may include any of the following:

Project management services (quality, cost control, timeliness) Asset management services (retail mall, hotels, golf course maintenance etc) Non-executive project management services Development of exit routes / sales strategies to maximise the return to Promoters

Asset Management Snapshot

Assets: Budget Hotels, Commercial Complexes, Apartments, etc. Asset Owners : Builders, Business Families Initial Value Proposition Cheaper, more efficient alternative Sustainable Value Proposition ROI, Asset Value Appreciation Credentials & Quality of Assets Capability in sales & marketing, development & other ends of the value chain

Asset Management : Role

The asset manager provides the following major services. This is not an exhaustive list.

Maximises the overall profitability of site. Analysis, options and recommendations to owner for decisions to be made by them Implementation to achieve the objectives and decisions of owner As required decisions for the general manager and management team based on those objectives Ensures that the strategy is converted to tactics and implemented with changes as required Looks at each Area of Operations (see above list) and look for efficiencies, improvements, structure, operations and quality Create Standard Operating Procedures to capture hotel policy on standards, quality, performance measurements Leads creation of operating budgets, capex priorities, recommendations and implementation Builds management team including hiring, reshaping and firing of senior staff, setting objectives, performance reviews and bonuses. Ensure non-financial objectives are achieved (eg quality, social justice programs, PR etc)

Opportunity Development and Asset Management NRI & HNI : Vacation Homes Middle Class : Sales & Marketing Conclusions

Understanding Vacation Home

Vacation Ownership
Property owned generally for personal use

Timeshare

A timeshare is a form of vacation property ownership. The use and costs of running the resort are shared among the owners

Vacation Rentals

Renting out a furnished apartment or house on a temporary basis to tourists as an alternative to a hotel

Vacation Exchange

You trade your interval or week for new and different vacation experiences at comparable resorts across the country and around the world

Segmentation of Vacation Home market internationally

International Demand Drivers

Baby Boomers

Economy Population Propensity to spend

Interest Rates

Income Levels Rate of borrowing

Tourism

Growth rate Attracting investment Government Initiatives Conferences

Key movers of the Vacation Home market

Vacation Homes-Internationally
Leisure Ac tivities Preferred

Tennis
9% 10%

Mode Of Purchase F or A Vacation Home

14%

5% 29%
18%

Golf

11% 20%
Real Estate Owners

68%

16%

Builders

Water Sports

Boating

Hunting/Fishing

Golf

Biking/Hiking

Skiing

Tennis

D esirable Attributes In A Vacation Home

Key Learning's: Internationally activities are critical aspects of Vacation Homes Brokers / real estate agents play a critical role as channel partners Locational advantage needs to be broadcast for each individual property
22% 22% 18% 38%

Close To Ocean/Lake/River Close To Resort Ares

Sporting Activities Mountains/Natural Destinations

Source: National Association Of Realtors 2006

Vacation Home Buyers: Internationally

Distance (Miles) 25 25-99 100-199 200-499 500-999 1000-1499 1500 and more Median Distance * Less than 1 % Vacation Home % 44 19 22 1 3 * 10 49 Investment Property % 69 9 5 * 3 6 8 18

Distances between residence & Vacation Home Usually less than 100 miles

Home Size (Sq.ft) 500 501-1000 1001-1500 1501-2000 2001-2500 2501-3000 3000 and more Median Size

Vacation Home % 4 14 56 11 9 5 1 1290

Format Studio 1 BDR 2 BDR 3 BDR

Investment Property % 1 14 22 31 12 10 10 1700

California Coastal 600 590 480 NA 50-150 South Florida 600 600 600 NA 50-300 Golf Destinations 700 550 450 400 50-150 Ski Destinations NA 550 580 600 50-100

Size of home : 1000-1500 sqf

Average value per sq.ft

Premiums ($ 000)

Source: Economic Realtors Research

US Vacation Home Market

GDP (In Billion USD) 14000 12000 10000 8000 Vacation home Industry (In Billion USD) 14 12 10 8

International Vacation Home market is maturing and seeing considerable growth The US$ 13 billion Vacation Home industry in US is 0.10% of GDP as of 2005 Multiple players product offerings having unlimited

0.10 %

0.08 %
6000 4000 2000 0 1990 2000 2005 6 4 2 0

0.05 %

GDP of US playing an integral role for burst of Vacation Home industry

Vacation Home market is growing @ 9.7% worldwide & @ 14% in U.S Along with high growth rates comes heightened competition Brands would soon start at exploiting other geographies

India Vacation Home

GDP (In Billion USD) 900 800 700 600 0.5 500 0.4 400 300 200 100 0 1990 2000 2005 0.3 0.2 Vacation home Industry (In Billion USD) 0.8

0.10 %

Given the current economic trends we can draw the following hypothesis: - The Size of the Vacation Home industry is approximately US$ 0.757 billion or INR 34,150 Crore

0.7 0.6

0.08 %

0.05 %

0.1 0

Experts predict the GDP growth rate to be close to 8%, the same would see a rise in income levels A factor which is one of the key growth drivers

Generation X will boost the growth of Vacation Homes in India India the next growth driver for international companies

Indian Luxury Consumer: HNI

Married and has kids

Average age = 36-40

CWE= Mostly Male 42% live in joint families Residing in posh localities 35% of wives working Owns D/E segment car 44% traveling abroad for vacation, at least once a year Disposable income 9 lac p.a

Affluent Map Of India

Predominantly luxury consumers are resided in the north and west of the country

Source: Technopark

Vacation Home : Snapshot

Vacation Home 100-200 kms from metros around a natural attraction primarily hill stations, beaches International Vacation Homes in Dubai, London etc. Customers HNIs & NRIs Initial Value Proposition Variety & convenience of one stop shop Sustainable Value Proposition Needs based development Reach & access to NRIs Destination development and marketing

Indian HNI : Primary Target

Products

Vacation Home Purchase/Lease of Commercial Investment in Real Estate Funds/ REITs

Competitive Landscape

Needs Prestige, Ego Value High Service Quality Large portfolio of options Customized Advisory Relationship Building Credibility & Accountability

Wealth Managers proffering Equity & Debt instruments Dedicated sales team representing high value assets Advertising & PR by builders & marketers

Opportunities

Convenience of one stop shop for real estate needs Advice rather than push Broaden the horizon to look at new emerging opportunities like equity involvement Wealth Management perspective

NRI : Secondary Target

Products

Vacation Home Equity investment in Commercial , Hotel Real Estate Development

Needs High Service Quality Large portfolio of options Customized Advisory Relationship Building Credibility & Accountability

Competitive Landscape

Wealth Managers proffering Equity & Debt instruments Dedicated sales team representing high value assets

Opportunities

Convenience of one stop shop for real estate needs Advice rather than push Broaden the horizon to look at new emerging opportunities like equity involvement Reach to micro-segments

Key Success Factors

Direct Selling & Marketing for HNIs, NRIs

Dedicated sales and service team for HNIs / NRIs Dedicated processes and systems to manage service & sales issues Dedicated telemarketing & call centre support

Direct marketing strategy comprising of internet marketing and other channels Pioneering new and exciting initiatives

Example :Halfshare.com specializes in the shared ownership of luxury vacation properties throughout North America.

They help buyers find their ideal vacation property or Vacation Home while matching them with the right co-owner through a Buyer Match Plan

Key Success Factors

Continuous inventory acquisition by a dedicated team

Dedicated team to scout for projects under development, completed projects, re-sale inventory Acquisition could be followed by

Re-packaging the real estate to make it more appealing to the target buyer

Sound Real Estate Knowledge Base

Ability to track trends and assess impact for HNIs Ability to give a wealth management perspective and offer

Good Service Quality

Training & People development to offer good service experience Personalized service to HNIs/NRIs Robust processes for transaction management Strong performance management system

Opportunity Development and Asset Management NRI & HNI : Vacation Home s Middle Class : Sales & Marketing Conclusions

Sales & Marketing to Middle Class

Customers : Middle class Initial value proposition Good Deal & Good Service Quality Sustainable value proposition Distribution channel Width and depth One stop shop Good Deal Service Quality

Differentiated Distribution Strategy

Development Potential

Franchisee

Full Fledged Company Operations

Average / Low

High

Franchisee

Company Operations + Franchisee

Average / Low

High

Purchasing Power

Benefits to Franchisees

Business Support

Business Operations Manual Exciting Inventory & Inventory Management Software Experienced Management & Franchise Advisory System Referral& Lead Management System New Business Generation Performance Monitor Staff Recruitment Assistance Programme Regional Managers and Franchise Operations Centres

Effective Marketing Mix

Advertising & Public Relations After Sales Service Regional Marketing Programme Branded Promotional Merchandising, Brochures etc Loyalty Card Programme

Personal Business Development

Comprehensive Introductory Programme Comprehensive Sales Training Programme Field Support Recognition Groups for Outstanding Achievers Software Support & Training

Distribution Development Plan

Amritsar Ludhiana
Gurgaon Jaipur Ahmedabad

Chandigarh Dehradun Delhi Lucknow Siliguri Guwahati

Indore
Vadodara Mumbai Pune Secunderabad Nagpur Raipur

Ranchi Kolkata

Bhubaneswar Vizag

Goa

Hyderabad Hubli Bangalore

Vijayawada

Chennai Mysore Kochi Coimbatore

Primarily Branches Franchisee + Branches Franchisee Only

Thiruvanantpuram

Key Success Factors

Wide Reach to Increase Convenience & Access

Branch network in class A cities Branch offices in strong NRI markets Extensive network of agents & franchisees on a win-win model

Wide Choice to Facilitate a One Stop Shop Experience

Continuous inventory acquisition by a dedicated team Effective Tie-Ups & Alliances to offer complementary & supplementary services Incentivizing the network to add inventory Effective inventory management software and systems Attractive inventory display & merchandising

Key Success Factors

Good Service Quality

Training & People development to offer good service experience Effective systems for inventory management Effective software and systems for CRM Robust processes for transaction management Strong performance management system Dedicated team to scout for projects under development, completed projects, re-sale inventory Acquisition could be followed by Re-packaging the real estate to make it more appealing to the target buyer Small value additions to make the inventory more valuable Exclusive marketing and sales rights to add to distribution power Win-Win model for agents/franchisees to populate the site with inventory Outsourcing of inventory acquisition to agents/franchisees in areas with low development potential and/or low purchasing power

Continuous inventory acquisition by a dedicated team

Incentivizing the network to add inventory

Key Success Factors

Integrated Software

A low cost suite of an easy-to-use integrated software systems Cover every key aspect of successful real estate agency practice Full technical and training support supplied by the team at Technology. Software system has a database, lead management , activity scheduler, diary and presentations package designed to create efficiency, lift sales and allow accountability in the office Software system are fully integrated.

This means that data only needs to be entered once. It is then available for use in all modules of the system

Opportunity Development and Asset Management NRI & HNI : Vacation Home s Middle Class : Sales & Marketing Conclusions

Differentiation vs. Returns

High Differentiation

Vacation Home/Retiremen t & Other Specialized Concepts

Average Differentiation

Asset Management

Development

Low Differentiation

Middle Class : Sales & Marketing

Immediate Returns

Medium Term Returns

Long Term Returns

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