Real estate refers to Property comprised of land and the buildings on it as well as the natural resources of the land including uncultivated flora and fauna, farmed crops and livestock, water and minerals.However,based on its use it is divided into three broad categories-residential, commercial and industrial.High growth in services and manufacturing sector has led to high demand for commercial and real estate.

There are different factors that act as drivers for the growth of real estate:

• Rise of middle class
• Decline of joint families
• Easy availability of finance
• Increasing tourism
• Fiscal policies and rising FDI
• Strong demographics
• International and medical tourism
• Developments of new streams of business.

Special economic zones have been set up to promote real estate businesses.Their main objectives are-

1. Generation of additional economic activities
2. Promotion of exports of goods and services
3. Promotions of investments from domestic and foreign sources
4. Creation of employment opportunities
5. Development of infrastructure facilities in the country.

Various initiates have been taken by the government in order enhance real estate sector activities and therefore a number of policies have also been framed.There has been a drastic curtailment in the restrictive policies such as the Urban Land Ceiling and the Regulations Act over the years.Also,there have been reforms in the Integrated Township Policy.Liberalization of FDI rules,emergence of real estate funds and the range of government benefits and incentives including residential tax breaks has further provided aid to the sector for its growth and development.

Some of the major players in the real estate business are-

DLF Group, Ansals, Parsavnath Developers,Unitech Group and K Raheja.

Subprime crisis is a situation starting in 2008 affecting the mortgage industry due to borrowers being approved for loans they could not afford. As a result, a significant rise in foreclosures led to the collapse of many lending institutions and hedge funds. The financial crisis in the mortgage industry also affected the global credit market resulting in higher interest rates and reduced availability of credit.

Development of Real Estate in India includes development of temples of modern India,townships,programming houses and green buildings.However, there have been certain barriers to the growth of real estate in India.They are-

• Skill shortage
• Non availability of statistics
• Overvaluation of property
• High Fragmentation
• Lack of transparency.

Recession has also largely impacted real estate.The key issues that led to recession are incomplete previous projects,bad debts,less demands in all segments and cash starvation.Companies like DLF which is a major player has taken certain steps to overcome these issues-

1. Launching affordable housing projects
2. Paying short term debt by raising long term debt
3. Sale of properties for liquidity preservation
4. Terminated projects with long gestation period
5. Tight cash flow that would help in cost reduction.

Measures taken to tackle the challenges have reaped results but India still needs to go a long way in facing and overcoming the new challenges by making a shift in its strategies and policies.Future expectations are that close to $8 Billion would flow into the Indian real estate market.There would be a significant increase in project execution through Public-Private partnerships.The demands for office and industrial space would increase and hence,the current levels of investments made are insufficient to bridge the gap between demand and supply.

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Investment banking refers to a specific division of banking related to the creation of capital for other companies.Investment banks underwrite new debt and equity securities for all types of corporations and provide guidance to issuers regarding the issue and placement of stock.In addition,they also aid in the sale of securities sometimes.They also facilitate mergers,acquisitions,reorganizations and broker trades for institutions and private investors.They can also trade securities for their own accounts.Investment banks do not accept deposits like other banks.

Investment banking have two main lines of business-the sell side and the buy side.The sell side involves trading securities for cash or for other securities and their promotion.For example-Underwriting,Research.The buy side involves lending advice to institutions that are concerned with buying investment services.Example-Hedge Funds.Unit Trusts.

The following are the functions of an investment banker-

• Core Business-Underwriting,distributing,advising
• Middle office-Risk management,Corporate treasury,Financial control,Corporate strategy,Compliance
• Back office-Operations,Technology

Importance of Investment banking-

• Importance to corporations-It helps corporations to raise their capital facilitating the trading of securities.This leads to the increase in the liquidity of the securities.
• Importance to Individuals-It provides investment opportunities to individuals and entities.
• Most of the corporations get advisory services from the investment banks regarding the mergers, acquisitions and divestiture.

In India,State Bank of India was the first public sector bank to set up investment banking division in 1972.SBI Caps and IDBI Caps are the two primary examples of investment banks in India today.Currently,there are 300 registered investment banks with SEBI. It is compulsory to hold a certificate of registration granted by SEBI of India to act an an investment banker.The ongoing transformation of the financial services industry has a significant impact on the way investment banks manage and think about their businesses. Widely reported incidents such as unauthorized trading and regulatory issues have given rise to questions over the role of investment banks and the value of some of their activities.  Investment banking activities, business, operations and even management are scrutinized by regulators and the media. Clients have higher standards and expectations and the regulatory framework continues to shift at both the local and global levels.

The investment banking industry faces a period of transformation. Building a long term strategy during this time of uncertainty and regulatory turmoil is a real challenge; nevertheless, the current market environment makes bold changes unavoidable. While there is certainly not a single recipe for success, the adoption of operational flexibility and the involvement of senior management in the design of structural reform in order to respond to emerging rules and opportunities will be key points to survival.

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