Developers across the country converged in Kuala Lumper to discuss a variety of issues related to the real estate industry.

When developers across the country converged in Genting Highlands, Kuala Lumper, for the NATCON 2007 real estate convention on February 8 and 9, the mood was buoyant, and it wasn’t only because of the crisp air and congenial surroundings. As Ramani Sastri, president, Confederation of Real Estate Developer’s Associations of India (CREDAI), put it, “We have moved from some of the worst years in real estate to some of the best.”

Consider the facts. India’s combined commercial and residential real estate market is valued at $12 billion, which is around two per cent of the country’s GDP and two per cent of total stock market capitalization, According to CREDAI. And the pie is getting bigger. The real estate market is growing at a rate of 30 per cent each year, and is expected to reach $90 billion within the next ten years.

The world has noticed this growth, and the big players are queuing up. Joint ventures and foreign direct investment are becoming the order of the day, and as various speakers pointed out, money is available in plenty provided the product is good.

International companies like Tishman Speyer, GE Commercial Finance Real Estate, and Vornado Realty Trust are seriously looking at India. In March, Vornado and India’s Chatterjee Group announced plans to jointly float a $50 million real estate fund; Morgan Stanley has reportedly invested $68 million in Bangalore-based Mantri Developers, and $152 million in Oberoi Constructions in Mumbai, and Pune-based Gera Developments recently entered into a Rs 550 crore joint venture with Citigroup Property Investors. “After China, India is our next market,” Said Lim Buey Shyan, Senior vice-president, corporate development division, Surbana International Consultants Pte, Singapore, who attended the conference. “India is very vibrant and there is real economic growth”.

Listings options are available in many international exchanges, offering access to a large and growing pool of international funds; as Jai Mavani, executive director, tax and regulatory services, KPMG India Pvt. Ltd pointed out, Alternative Investment Markets (AIM) – London, offers funding avenues to smaller and growing companies, and has “very deep pockets, allowing one to raise large amounts of money with little effort, if one has the right story to tell:. Builders are also increasingly looking at Initial Public Offerings (IPOs), and according to ICICI Bank’s Rajiv Sabharwal, mutual funds will be the flavour of 2007-2008.

The real estate industry has been reaching out to wider target audiences, and meeting new demands. Sabharwal says 25-30 per cent of revenue is from non-residential and non- commercial, as leisure, health care, and retail.

Retail, in fact, has been the big story in recent times; while estimates may vary, CREDAI says that more than 50 million sq ft of quality retail space is currently under development, out of which 41 million sq ft is spread across seven major cities. This sector is expected to give rise to development of over 30-35 million sq ft in the next three years in cities like Mumbai, NCR, Bangalore, Chennai, Hyderabad, Pune and Kolkata. Tier II and TIER III Cities are seeing a sea change in retail growth, as Dharmesh Jain, Chairman and managing director of Nirmal Lifestyle pointed out, 40 million Indians have the same purchasing power as Americans and this is growing at 8 to 10 per cent every year.

As India’s appetite for shopping and entertainment grows, multiplexes and malls are forging new synergies, with people like Pasesh Kanakia, chairman kanakia Group, Leading the way through Cinemax, offering option of watching movies in retail spaces. Demand for such formats will certainly grow.

Of course, there are many issues that are yet to be ironed out, and Kumar Gera, chairman, CREDAI, put it strongly. “The government makes policies, then changes them, and has knee-jerk reactions, “he said, adding that this could be “dangerous to capital: and certainly a matter of concern. The other issue is that of crumbling infrastructure – a situation with which we are all familiar.
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