Driven by a positive growth in the economy, the property market in India has seen a massive growth in the last two years, valuing the sector at about $14 billion currently. The government has also opened up the sector to FDI by relaxing norms in 2005.

This is well received by the market players. International institutional real estate investors have made a beeline to invest in domestic realty projects. JP Morgan, Citigroup, Blackstone and Trikona Capital are among the key international realty funding agencies that are scouting for projects in India.

“As long as the rule is there, it means that there needs to be a local partner who knows the law of the land. Most of the foreign investment, if not all, will be in conjunction with local partners to do green field developments. I feel it is a win-win for local developers as well as foreign investors,” says Balaji Rao, MD, Starwood Capital.

Infrastructure is key to India's economic growth and the industry players believe that foreign investment in the real estate sector will help in raising capital to build infrastructure and will also ease supply in the residential segment.

The entry of overseas realty players has also helped in transforming the Indian real estate business into a more transparent and accessible market.

“FDI is definitely going to contribute by making additional capital available. It will also make additional expertise available. The answer really lies with the government; the will to create more supply has to come from there,” says Akshaya Kumar, Park Lane Property Advisors

The recent hike in interest rates has spooked the property market and certain sectors have seen a significant drop in prices. This is seen as an opportunity for the overseas players to enter the markets. But on the flip side, industry experts argue that a slowdown in demand and strict government regulations may keep the investors out of the market for a while.

India's property market boasts of five-fold growth to $60 billion by 2010. No wonder then that overseas realty players are lining up to get a share of the pie. Back home, its a win-win situation for both investors and real estate developers as the investors get good returns and developers get an easy supply of capital.



Source: Times Now TV
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