July 20, 2024


Mad about real estate

Indian Property Market Graph 2008

  1. The Indian real estate sector is witnessing burgeoning growth over the past couple of decades and also one of the fastest growing sectors in the country that in turn lure investors worldwide to invest in India’s growing real estate markets like Chennai, Bangalore, Hyderabad, Gurgaon Mumbai etc. This augment in growth is due to several factors like rising income levels among growing middle class, nuclearization of families, easy home loans and changing demographics of home buyers (the average age of a new homeowner in 2006 was 32 years compared with 45 years a decade ago.

    A growing Indian economy has created huge demand for commercial property spaces in the country to meet the office space needs for a leading corporate, MNCs, IT/ITES sector and organized retail. The Indian organized retail itself is likely to acquire 220 million sq.ft. by 2010 across pan-India not limited to only top cities alone.

    With a rising demand in the Indian realty, there are a large number of international real estate players have entered the real estate segment in the country. The demand for office space is growing at a CAGR of 13{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} on a pan-India basis. 

Office Space Demand Projection

Indian Property Market Graph 

Key regulatory developments
The key regulatory developments in the country are listed below that enlightens the growth momentum in the Indian real estate market:

·Foreign investors are allowed to invest in commercial real estate developments across the country with a minimum built up area of 50,000 million sq.ft and Minimum area threshold for FDI in Integrated Townships reduced to 25 Acres from 100 Acres.

. Securities & Exchange Board of India (SEBI) has allowed Indian venture capital firms to invest in real estate.

·Under Automatic route, 100{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} Foreign Direct Investment (FDI) is allowed in the construction sector.

Global Investors
Today, the leading global investors are exploring the untapped opportunities in India’s real estate market with an investment worth of US$20 billion by 2010. Some of the big players like JP Morgan, Merrill Lynch, Lehman Brothers, GE Capital, HSBC, Government of Singapore Investment Corporation and host of others. The following are a few highlights in the real estate investments in the country:

·One of the world’s leading global real estate firm, Jones Lang LaSalle (JLL) plans to invest around US$ 1 billion in India’s property market.

·Dawnay Day International plans to setup a chain of four-start hotels in India with investment worth of US$ 4 billion.

· India Land Ventures (ILVL), a part of the Madrid-headquartered Americorp Group plans to invest US$ 585.48 million in eight key infrastructure projects across the country in the upcoming years.

.A unit of Deutsche Bank aims to invest more than US$ 1 billion over three years in Indian construction and real estate projects.

·Global real estate majors such as Dubai World, Trump Organization of US, Smart City of Dubai and others have huge real estate development plans with an investment worth of US$20-25 billion in the upcoming years across the country.

Real estate developments
India’s leading real estate developers have huge plans in the real estate development activities in the country like:

·Golden Gate Properties aims to invest US$ 437 million over 2 years in the residential projects in Bangalore and Hyderabad.

·Puravankara plans to build affordable housing projects in Bangalore, Chennai, Hyderabad, Coimbatore and Mysore in the built-up area of 59.80 million sq.ft comprises of 64,500 homes in the next five years.

·Mukesh Ambani-led Reliance Industries has announced a 50-50 partnership with US-based real estate investment trust Vornado to collectively invest US$ 500 million in a shopping mall.

·Bombay Dyeing plans to invest US$ 218.82  in Mumbai to construct both residential and commercial properties in 800,000 sq ft of land.

Thus, India real estate has become a hot pick for global investors with FDI inflows worth of US$25 to US$ 28 billion investments. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), India’s real estate sector is worth around US$12 billion and is expected to reach US$ 60 billion by 2010 i.e. growing at a brisk 30 per cent annually. So, India’s leading realty developers are raising billions of rupees through initial public offerings (IPOs) in India.