Booming Indian real estate needs transparency and reform
Wednesday, 21 November 2007
INVESTORS are lining up for India's booming real estate. The past few weeks saw private investments in the sector amounting up to US$50 billion.
Recently, Delhi building company, DLF signed a $20 billion deal with the world's largest privately held real-estate developer, Al Nakheel of the United Arab Emirates, to build two townships in northern and western India. The companies will invest $5 billion each in the next three years to develop about 16,000 hectares of land in the states of Haryana (Gurgaon) and Maharashtra (between Pune and Mumbai). Moreover, DLF will be launching an IPO that could raise about $2 billion.
Another deal includes the Hinduja Group for a chain of hospitals in a tie-up with Dubai's government-owned Limitless LLC with an investment of $1 billion.
Other large investments include Macquarie Bank, Australia's largest securities firm, and its three partners in a total of US$25 billion to create an ultra-modern integrated township, and Tishman Speyer Properties LP, with a $2 billion residential and commercial township near Hyderabad.
Despite warnings about a speculative bubble and the need to set up a regulatory authority to ensure transparency, real estate has been a focus area for investors. Observers cite contributing factors being runaway economic growth and rising incomes. It is expected that the creation of adequate commercial and residential space will result in runaway prices, which are beyond the reach of many people.
Currently growing at 30 per cent per annum, the Indian real-estate market is estimated to be worth more than $15 billion. A recent study has shown that domestic and overseas investors and private-equity funds are looking to pump a whopping Rs320 billion ($7.36 billion) into India's real-estate sector.
Last year, India's largest private-sector entity, Reliance Industries Ltd, and the Haryana government signed an agreement for setting up India's single largest multi-product SEZ, involving an investment of nearly $9 billion.
Although all SEZ approvals have been put on hold after the Nandigram violence, New Delhi is widely expected to give the go-ahead. States such as Tamil Nadu, Gujarat, Andhra Pradesh, Karnataka and Haryana, where the land-acquisition process has been peaceful, have been pushing for SEZs.
Hospitality is one red-hot area into which an estimated $2 billion is likely to be pumped over the next three years, the bulk of it through private-equity funds.
The ICICI-Technopak study on mall development predicted that because of the sustained yield of about 18 per cent in the retail real-estate sector, the next stage of sophisticated funding mechanisms might include real-estate investment trusts, real-estate mutual funds (REMFs), venture-capital funds and initial public offerings.
While Bangalore, Delhi and Chennai figure prominently in everybody's plans, new and cheaper locations are being charted in Andhra Pradesh, West Bengal, Tamil Nadu and Rajasthan, the study said.
India will also see an international shift in the real-estate sector due to the ongoing information-technology boom, according to Peter Penhall, chief executive officer of Gowealthy.com, one of the Middle East's well-known real-estate and online property-brokerage portals,
According to inrnews.com, real estate in India is becoming a catalyst for economic growth and if transparent comprehensive reforms are carried out in the sector, it alone would contribute to over 25 per cent growth to achieve the 10 per cent GDP growth rate for India
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Internet
Recently, Delhi building company, DLF signed a $20 billion deal with the world's largest privately held real-estate developer, Al Nakheel of the United Arab Emirates, to build two townships in northern and western India. The companies will invest $5 billion each in the next three years to develop about 16,000 hectares of land in the states of Haryana (Gurgaon) and Maharashtra (between Pune and Mumbai). Moreover, DLF will be launching an IPO that could raise about $2 billion.
Another deal includes the Hinduja Group for a chain of hospitals in a tie-up with Dubai's government-owned Limitless LLC with an investment of $1 billion.
Other large investments include Macquarie Bank, Australia's largest securities firm, and its three partners in a total of US$25 billion to create an ultra-modern integrated township, and Tishman Speyer Properties LP, with a $2 billion residential and commercial township near Hyderabad.
Despite warnings about a speculative bubble and the need to set up a regulatory authority to ensure transparency, real estate has been a focus area for investors. Observers cite contributing factors being runaway economic growth and rising incomes. It is expected that the creation of adequate commercial and residential space will result in runaway prices, which are beyond the reach of many people.
Currently growing at 30 per cent per annum, the Indian real-estate market is estimated to be worth more than $15 billion. A recent study has shown that domestic and overseas investors and private-equity funds are looking to pump a whopping Rs320 billion ($7.36 billion) into India's real-estate sector.
Last year, India's largest private-sector entity, Reliance Industries Ltd, and the Haryana government signed an agreement for setting up India's single largest multi-product SEZ, involving an investment of nearly $9 billion.
Although all SEZ approvals have been put on hold after the Nandigram violence, New Delhi is widely expected to give the go-ahead. States such as Tamil Nadu, Gujarat, Andhra Pradesh, Karnataka and Haryana, where the land-acquisition process has been peaceful, have been pushing for SEZs.
Hospitality is one red-hot area into which an estimated $2 billion is likely to be pumped over the next three years, the bulk of it through private-equity funds.
The ICICI-Technopak study on mall development predicted that because of the sustained yield of about 18 per cent in the retail real-estate sector, the next stage of sophisticated funding mechanisms might include real-estate investment trusts, real-estate mutual funds (REMFs), venture-capital funds and initial public offerings.
While Bangalore, Delhi and Chennai figure prominently in everybody's plans, new and cheaper locations are being charted in Andhra Pradesh, West Bengal, Tamil Nadu and Rajasthan, the study said.
India will also see an international shift in the real-estate sector due to the ongoing information-technology boom, according to Peter Penhall, chief executive officer of Gowealthy.com, one of the Middle East's well-known real-estate and online property-brokerage portals,
According to inrnews.com, real estate in India is becoming a catalyst for economic growth and if transparent comprehensive reforms are carried out in the sector, it alone would contribute to over 25 per cent growth to achieve the 10 per cent GDP growth rate for India
............
Internet