The Real Estate Player: India

India has emerged as swift, strong and bold player in the new millennium of real estate. From residential to commercial or retail whatever the realty property is Industry experts believe that the Indian real estate has huge demand potential in almost every sector Specially in Ahmedabad where flats in ahmedabad are in high demand.

Real Estate explosion:-

From 2010, IT sector alone is expected to require 150 million sq ft of space across major cities. 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. New companies means new offices, shops and houses in short residential, commercial and retail spaces.

People have more purchasing power and exposure to organized retail formats has redefined the consumption pattern. This growth is facilitated by increasing purchasing power, favorable demographics, existence of customer friendly banks and housing finance companies, professionalism in real estate and reforms initiated by the Government to attract global investors. Even small towns want to emulate the culture of their big city cousins. Retail projects have been mushrooming across even B grade cities as a result.

This new way of life has quite drastically changed the face of India’s real estate. Small shops, office blocks and old fashioned bungalows have all changed into luxurious apartments with club houses, sprawling greens and pools. Instead of small shops we have humongous sprawling malls and office complexes as well.

Global Effect:-

In February 2005, the first dynamic impact that announced a global change in the Indian real estate sector came when the Government introduced new policies. 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 of today.

Dozens of US funds are being raised for investments in Indian realty. Industry sources more than 90 foreign investors are already in the country tapping into the real estate investment avenues in India. Those raising the funds include Blackstone Group (US$ 1 billion); Citigroup Property Investors (US$ 125 million); Goldman Sachs (US$ 1 billion); Morgan Stanley (US$ 70 million) and GE Commercial Finance Real Estate (US$ 63 million); Warburg Pincus; JP Morgan; Merrill Lynch; Warren Buffett’s Berkshire Hathaway; Lehman Brothers; Colony Capital and Starwood Capital.

Morgan Stanley closed a deal worth about US$ 150 million with Oberoi Constructions in Mumbai where as the Nakheel Group in Dubai entered into a US$ 10 billion deal with DLF for residential projects in Tier I and II cities of India. This was followed by three financial institutions: Kuwait Investment Company (KIC) from the Middle East, Khaleej Finance and Investment (KFI) from Bahrain and Kuwait Finance House (KFH) again from the Middle East. They are promoting US$ 200 million fund for investing upon real estates of India.

The Players:-

Indian financial institutions are competing with each other. Investors back home have also sat and started taking active participation in the real estate segment. Prominent companies promoting real estate funds in India are DHFL Venture Capital Fund, HDFC Property Fund, Kshitij Venture Capital Fund, Kotak Mahindra Realty Fund and ICICI’s 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. The Tata group has also joined hands with private equity firm Xander to raise US$ 1 billion for an institutional retail real estate fund.

Final Conclusion:-

Property prices in India are rising fast. And it is not only limited to the mega metro cities only. Most of the investors are from abroad. The tech boom is spreading all across the country and more Indians are buying homes and as the economies are also growing faster than 8% a year, the real estate market is attracting more investors. So in the Indian Real Estate Game, it is no longer going to be cheap or easy to be a player.