Indian Real Estate is one of the highest space for investments from the very early age and it will last long to the very ending of this earth. Real Estate will be no harm if whatever happens to any other sector. So if investors are ready to invest in real estate then they are doing the right plantation for their future returns.
First, let us see the Indian real estate scenario.
Indian Real Estate is ranked fourth in developing Asia for FDI inflows as per the World Investment Report 2016 by the United Nations Conference on Trade and Development and this is endorsement at the highest levels. Followed by this, Real Estate saw equity investment on a very visible journey to India last year. Again followed by this, Indian real estate attracted $32 Billion in private equity so far. Apart from the private equity, the global capital flow into Indian real estate in 2016 stood at $5.7 Billion.
As last year proved to be the second-best year for real estate (the first best year was 2007). Despite Brexit and uncertainty around the new US president’s new visa policies, private equity also looks great in 2017. Thanks to a growing and modernizing economy and the growing reputation of India as an attractive investment destination.
Now let us see about the investment idea. (Information source: www.ibef.org)
The Indian real estate sector has witnessed a high growth in recent times with the rise in demand for office and residential spaces. The real estate sector in India is expected to attract investments worth US$ 7 billion in 2017, which will rise further to US$ 10 billion by 2020. According to data released by Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received Foreign Direct Investment (FDI) equity inflows to the tune of US$ 24.29 billion in the period April 2000-March 2017.
There is the major investment which is to be initiated by many leading private as well as government firms.
- Godrej Properties Ltd has tied up with Taj Palaces Resorts Safaris for developing its mixed-use project called ‘The Trees’, spread across 9.2 acres, that will include a 150-room Taj Hotel, a luxury residential property called ‘Godrej Origins’ as well as a high-street retail court.
- Ascendas-Singbridge Group, a property development company based in Singapore, has purchased six warehouses from Arshiya Limited for a consideration of Rs 534 crore (US$ 83 million), of which Rs 434 crore (US$ 67 million) would be paid on signing the definitive agreement, and the balance over four years on the attainment of certain targets.
- International Finance Corporation (IFC) will invest US$ 200 million in Housing Development Finance Corporation Ltd (HDFC) via five-year non-convertible debentures (NCDs) or masala bonds which will be used by HDFC to provide loans for affordable housing projects across India.
- Motilal Oswal Real Estate, a real estate-focused investment subsidiary of Motilal Oswal Private Equity Advisors Pvt Ltd, is planning to invest Rs 800 crore (US$ 124 million) in FY 2017-18 in mid-income residential projects as well as commercial office projects.
- Xander, a Private Equity Group, has signed two major property deals, which includes a special economic zone worth Rs 2,290 crore (US$ 354.95 million) in Chennai and a 2 million sq ft mall in Chandigarh for Rs 700 crore (US$ 108.5 million).
- Canada Pension Plan Investment Board (CPPIB), the Canadian pension asset manager, has entered into a non-binding agreement with Island Star Mall Developers (ISML), a subsidiary of Phoenix Mills, to acquire up to 49 percent in ISML in the next three years.
- Altico Capital, a non-banking finance company (NBFC), has teamed up with American private equity firm KKR & Co LP to invest Rs 435 crore (US$ 65.25 million) in a 66-acre residential township, being developed by SARE Homes in Gurgaon.
- Gurgaon-based property search aggregator Square Yards Consulting Pvt Ltd has raised US$ 12 million from the private equity arm of Reliance Group for strengthening its team and expanding its presence to more than 25 countries.
- Rising Straits Capital plans to raise US$ 100 million to capitalize its real estate-focused non-banking financial company (NBFC), Rising Straits Finance Co. Pvt. Ltd.
- Ivanhoe Cambridge, the real estate arm of Canada’s second-largest pension fund manager Caisse de dépôt et placement du Québec (CDPQ), plans to enter into a Joint Venture (JV) agreement with Piramal Fund Management to set up a US$ 250 million venture, which will provide equity capital to developers of residential projects in the country.
- Macquarie Infrastructure and Real Assets (MIRA) and Tata Housing Development Co. Ltd have entered into a 70:30 partnership to invest Rs 1,400 crore (US$ 210 million) and Rs 600 crore (US$ 90 million) respectively in high-end residential property projects, starting with four major cities of Mumbai, NCR, Bengaluru, and Pune.
- Qatar Holdings LLC, a subsidiary of Qatar Investment Authority, has committed to invest US$ 250 million in the affordable housing fund of Arthveda Fund Management Pvt Ltd.
- Piramal Realty, the real estate division of Piramal Group, plans to invest Rs 1,800 crore (US$ 270.14 million) in an eight-acre project named Piramal Revanta in Mulund, Mumbai.
- A joint venture between Dutch asset manager APG Asset Management and real estate asset platform Virtuous Retail has acquired a portfolio of three shopping malls for US$ 300 million and has committed an additional US$ 150 million as equity capital to expand the portfolio.
Now take a look at government initiatives
Government to work on smart city project where there will be 100 smart cities will be built which, therefore, is a better chance for investing companies to stand better.
- The Reserve Bank of India (RBI) has proposed to allow banks to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) which is expected to benefit both real estate and banking sector in diversifying investor base and investment avenues respectively.
- The Delhi Government has declared 89 out of 95 villages in Delhi as urban areas which will ease the operationalizing of the land pooling policy, thereby giving a boost to affordable housing in Delhi.
- The Ministry of Housing and Urban Poverty Alleviation has sanctioned the construction of 84,460 more affordable houses for urban poor in five states, namely West Bengal, Jharkhand, Punjab, Kerala and Manipur under the Pradhan Mantri Awas Yojana (Urban) scheme with a total investment of Rs 3,073 crore (US$ 460 million).
As you can see, private investing firms and government are working on their big projects of real estate, thus, this will improve the country’s GDP and ultimately will benefit the golden investors of today. So, if you are thinking to invest and willing to be one of the golden investors then let me tell you, you are the one who will be benefited through the higher returns of tomorrow.