America’s and Europe’s adversity could well be an opportunity for Mumbai’s developers.
America’s and Europe’s adversity could well be an opportunity for Mumbai’s developers.
With realty markets in the West reaching a point of saturation — registering zero and even negative growth in the last one year — the Asia-Pacific region’s high growth real estate sector is emerging as an investment magnet.
Funds to the tune of $311 billion have been earmarked for the Asia-Pacific region. While China, Australia and Japan are top priorities for fund allocation, India’s realty sector is tipped to get 12% of the funds, according to a research report released by DTZ International, an MNC consultancy.
“Over the next one year, India’s realty sector will attract investments to the tune of $37 billion (Rs1,66,500 crore),” said Anshul Jain, CEO of DTZ India.
The investments will come from four baskets — private equity, public equity, private debt and public debt — from abroad, as well as within the country, Jain added.
According to the report, even as the real estate yields in mature economies are narrowing, India’s current commercial property yield of 10% to 11% is a big attraction for both, foreign as well as local investors.
Moreover, rental rates for grade A commercial properties in tier-I cities, such as Mumbai, have appreciated sharply, accruing good returns on investments. “Even if foreign private equity players pull out gradually to book profits, the local investors will up the stake and keep the momentum going,” Jain said.
A handful of international real estate consultancies and banking firms with a low-key presence are already engaged in private placement of foreign equity with leading developers.
“The growth of the real estate sector is expected to continue with strong IT & ITES, banking, financial services and insurance and corporate demand driving the office sector. The growth rate for the retail market is also expected to be strong, with organised retail bouncing back sharply in the last six months,” said Anuj Puri, country head, Jones Lang LaSalle India.
Puri added that talks are on to allow FDI in the vital multi-brand segment of Indian retail.
Another segment which is tipped to receive heavy FDI inflows is large townships, where the government has allowed 100% FDI investments.
“This is the right time to take the scope of development funding to a higher level. The corporate finance sector was largely unorganised for real estate and investors have not had many good experiences. Once they are convinced about the India real estate story, the second wave of funds will start flowing into a more matured market to find greater traction,” said Ambar Maheshwari, managing director - corporate finance, JLL.
Cash-strapped developers are waiting for the fresh wave of investments, so that they can roll out their projects. “With banks adopting a conservative approach, we are working closely with private and institutional investors in the equity as well as debt space. The deals are expected to be sealed in the next couple of months, after which the sector will get a fresh infusion of funds,” said a leading developer.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}