Opportunities for Investors in
Indian Real Estate
India in the recent times has been the potential goldmine for investors all over the world. With a booming economy and liberalized government policies, investors from all over the globe are choosing India as their business destination.
As Indian real estate rules the economic vibes of the country, the most important beneficiary of the recent boom in this sector is the investors. Driven by positive growth in the real estate scenario and the Government of India’s decision to allow100% foreign direct investment (FDI) under the 'automatic route' in the construction and development there has been a significant rise in the number of Indian as well as foreign investors in the realty sector.
While top developers in India like the DLF, Ansal, Omaxe, Sobha Developers, Bengal Ambuja, Unitech, Vatika and Sahara Infrastructure among a few have initiated large scale real estate developments in the residential sector catering to all segments of the society. With more corporate houses entering real estate, a corporatisation of real estate can be witnessed.
Real estate is much more professionally managed with a number of big players (developers as well as corporates) entering the business. There are no monopolistic positions in real estate, as there are more players today in the development game. The greater the number of players, the healthier the competition and the beneficiary of all this would at last be the end-user.
In the residential segment, with the increase of disposable incomes and easy availability of home loans, most builders are trying to woo investors with lucrative features and the latest inclusions are premium luxury apartments and condominiums fitted with the most modern accessories in home luxury.
The commercial ventures include state-of-the-art office spaces, sprawling malls, multiplexes and retail outlets. Reports indicate that around 200 new malls with a combined retail space of Rs.2.5 crore/sq.ft and investment of Rs.12.500 crore are expected to come up in this year.
The boom and the relaxation in FDI are also attracting interest from foreign investors to invest in India and many are seen tying up with the local developers in expanding their business. As the competition in the market is intense, builders are going out of their way to be different and provide quality services.
Major real estate investor’s in the foray
Emmar Properties, of Dubai one of the largest listed real estate developer in the world has tied up with the Delhi-based MGF Developments to announce India's largest FDI in the realty sector for mall and other facilities in Gurgaon. On the other hand, in a recent development DLF and UK-based construction major, Laing O'Rourke (LOR), has joined hands for participation in airport modernization and infrastructure projects.
Again, Morgan-Stanley Real Estate has announced that its investment of around US$ 68 million in Mantri Developers Private Ltd, a private Bangalore-based real estate developer. DB Real Estate, a unit of Deutsche Bank AG, has set up plans to start a global fund that will invest as much as US$ 300 million in India to tap an expected surge in demand for property.
Vancouver-based Royal Indian Raj International Corporation (RIRIC) will invest a whopping US$ 2.9 billion in a single real-estate project named Royal Garden City in Bangalore. Estimated to be of retail value Rs 41,000 crores, this project is to be completed in period of 10 years. Indonesia-based Siputra Selim group is slated to invest $200 million into the housing sector in Kolkata.
Indiabulls Real Estate (IREL) is proposing to enter into arrangements with Dev Property Development, a company incorporated in the Isle of Man, whereby Dev shall subscribe to new shares and also acquire a minority shareholding from the company, in Indiabulls Property (IPPL), Indiabulls Real Estate (IRECPL) and Indiabulls Infrastructure Development (IIDL). Dev has completed an initial public offering of its ordinary shares for a total amount of Rs 12 billion or GBP 138 million and shall be listed on the alternative investment market of the London Stock Exchange.
As the real estate investments open up opportunities for the associated fields like Home Loans and Home Insurance, a number of global insurance companies have shown interest in the sector. This include companies like Cesma International from Singapore, American International Group Inc (AIG), High Point Rendel of the UK, Colony Capital and Brack Capital of the US, and Lee Kim Tah Holdings to name a few.
As the Indian real-estate companies are in the expansion process to meet the demand for homes, offices and retail space as overseas companies are allowed in more industries and faster economic growth boosts middle-class incomes in the country. This has also generated the need for funds for investment into the realty sector creating the need for organized finance.
As India opens up its market to foreign players there is bound to be a competitive edge to give quality-based performance for customer satisfaction which will consequently bring in quality technology and transparency in the construction and realty sector. And the ultimate winner irrespective of all is surely to be the buyers.