India - The Real Estate Player
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In the new millennia of real estate India has emerged as strong, swift and
bold player. Industry expert’s believe that the Indian real estate has huge
demand potential in almost every sector, be it commercial, residential or
"India is the most exciting real estate market in Asia," says Michael Smith,
head of Asian real estate investment banking at Goldman Sachs. "It's one of the
last major countries in Asia with an improving market."
The Real Estate explosion
This spurt of growth in the Indian real estate is in large part due to the by
the burgeoning outsourcing and information technology (IT) industry. By 2010,
the IT sector alone is expected to require 150 million sq.ft. Of space across
major cities .New companies means new offices, houses, shops in short
commercial, residential and retail space.
This growth is facilitated by favorable demographics, increasing purchasing
power, existence of customer-friendly banks and housing finance companies,
professionalism in real estate and reforms initiated by the Government to
attract global investors. People have more purchasing power and exposure to
organized retail formats has redefined the consumption pattern. Even small towns
want to emulate the culture of their big city cousins. As a result, retail
projects have been mushrooming across even B-grade cities.
This new way of life has quite drastically changed the face of India’s real
estate, may it be the city centers the urban areas or the new yuppie towns.
Small shops, old fashioned bungalows and office blocks have all changed into
luxurious apartments, with club-houses, pools and sprawling greens. Instead of
small shops we have humongous sprawling malls and office complexes.
The Global Effect
When Farallon Capital Management, a U.S. hedge fund, and its joint-venture
partner, Indiabulls, snapped up an 11-acre property in central Mumbai in March
2005 for $54.5 million an acre, the purchase was called an act of idiocy by
local developers. A few months later, when the same joint venture offered $95.5
million an acre for a nearby property, this was the second-lowest bid.
The first dynamic impact that announced a global change in the Indian real
estate sector came when the Government introduced new policies in February 2005.
It allowed 100 per cent foreign investments in construction projects with
fast-track approvals. But the fatal attraction for foreign investors was the
potential investment returns of 25 per cent or more in Indian projects that were
nearly impossible to achieve in the US and European markets today.
Industry sources more than 90 foreign investors are already in the country
tapping into the real estate investment avenues in India. Dozens of US funds are
being raised for investments in Indian realty. Those raising the funds include
Blackstone Group (US$ 1 billion) Goldman Sachs (US$ 1 billion), Citigroup
Property Investors (US$ 125 million), Morgan Stanley (US$ 70 million) and GE
Commercial Finance Real Estate (US$ 63 million) JP Morgan, Warburg Pincus,
Merrill Lynch, Lehman Brothers, Warren Buffett’s Berkshire Hathaway, Colony
Capital and Starwood Capital, and believe it or not this is just the tip of the
Morgan Stanley closed a deal worth about US$ 150 million with Oberoi
Constructions in Mumbai. The Nakheel Group in Dubai entered into a US$ 10
billion deal with DLF for residential projects in Tier I and II cities. This was
followed by three financial institutions -- Khaleej Finance and Investment (KFI)
from Bahrain, Kuwait Investment Company (KIC) and Kuwait Finance House (KFH) --
from the Middle East promoting a US$ 200 million fund for investing in India.
Players At Home
Investors back home have also sat and started taking active participation in
the real estate segment. Indian financial institutions are competing with each
other. Prominent companies promoting real estate funds in India are HDFC
Property Fund, DHFL Venture Capital Fund, Kotak Mahindra Realty Fund, Kshitij
Venture Capital Fund and ICICI’s real estate fund, India Advantage Fund.
The Tata group has also joined hands with private equity firm, Xander, to
raise US$ 1 billion for an institutional retail real estate fund. DLF has raised
US$ 2.24 billion in the country's largest initial public offering and has also
entered into a joint venture agreement with Indian pharmaceutical major Ranbaxy
group company Fortis Healthcare to set up hospitals across the country with
investments of about US$ 1.5 billion.
But with the boom comes the crunch, property prices in India are rising fast,
real fast and not just in the biggest cities. As the tech boom spreads across
the country, and as more Indians buy homes, and as the economy grows at faster
than 8% a year, real estate is attracting more investors, many of them from
It is really no longer going to be cheap or easy to be a player in the Indian
Real Estate Game.
About the Author
Rahul Boss is a promotional writer having deep knowledge of Real Estate
Player India . Now he moves to Retail Shopping Center Developer India.
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Article Published/Sorted/Amended on Scopulus 2008-02-09 21:51:54 in Business Articles