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REAL ESTATE
The Indian economy is steadily moving forward
on its path to prosperity with economic development
being the focal point of the progress. In the
post liberalization era, India has attracted huge
quantum of foreign direct investment on account
of its excellent economic performance and recently
real estate sector has also been deregulated and
liberalized. Today India is seen as a prime destination
for investment by overseas investors across the
board. India's favorable demographic and economic
scenario makes it an attractive destination for
the real estate investors.
An Overview
Key Growth Drivers: The propellants for
the real estate sector are
- Growth of India's middle class creating demand
for housing.
- Strong demographic impetus: India has the
second largest population in the world and the
growth rate of population is still rapid.
- Rising FDI levels has increased commercial
space requirements by foreign firms.
- Expansion of organized retail sector.
- Easy availability of finance.
Retail Real Estate: Today, the face of
Indian retail sector is changing. The traditional
stores are being replaced by retail chains, shopping
centres, supermarkets and hypermarkets. From the
beginning of 2006, the Government has allowed
foreign direct investment in retailing, with 51
percent participation. The retailing sector is
projected to reach US$ 23 billion by 2010. This
growth in the retail sector will inevitably provide
strong impetus to the retail real estate.
Housing Real Estate Demand: Several factors
including rapid population growth, rising incomes,
emergence of nuclear families, tax incentives,
availability of home loans at competitive rates
are responsible for the growing demand for houses
and hence extensive residential construction.
There is currently a shortage of around 20 million
units and the demand is expected to rise in the
forthcoming years. The current scenario is very
conducive for investment in the housing real estate
sector.
Structure: Real estate is a highly fragmented
sector with only a few organized players. Most
real estate developers have only a local or regional
presence and there is moderate participation from
large corporations till now. The top players in
the real estate and construction industry are
Unitech, Hiranandani, DLF, Ansal group.
Investment Opportunities
- Residential Complexes
- Office/ Industrial Complexes
- Commercial Space for Organized Retailing
- Hotels and Hospitality Sector
- Special Economic Zones
- Venture Funds
Policy Initiatives
FDI Policy
- Limit of FDI in Limit for FDI investment
in township project reduced from 100 to 25 acres.
Min. Capitalization USD 10 Mn (wholly owned
subsidiaries) and USD 5.0 Mn (JV with Indian
partner).
- Investment can be repatriated after 3 years
of project completion.
Major Projects Cleared by
FIPB
- Dubai based Emaar group USD 500.0 million
- CESMA Intt Pvt Ltd with AP Govt - township
project at Hyderabad and Vijaywada
- Jakarta based Salim group USD 100.0 million
project at Kolkata
- Lee Kim Tah Holdings, Singapore USD 115.0
million project at Chennai.
- IJM's USD 350.0 Mn project at Mohali, Chandigarh
- Keppel Land, Singapore's USD 13.0 million
land acquisition at Bangalore for condominium
project in JV with Puravankara
- Morgan Stanley's USD 70 million in Mantri,
Bangalore
- Capital Land's investment with Runwal Group,
Mumbai
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