F.D.I . SCENARIO IN INDIA

India’s real estate sector is undoubtedly on a high growth path and recognised as global investors’ choice. India is holding ninth position among retail markets in the world with organized retailing and growing at the rate of 30 percent per annum. India has played up to its image of being one of the most attractive FDI destinations. The positive outlook of Indian government is the key factor behind the sudden rise of the Indian real estate sector
The The Institute of International Finance (IIF)expects FDI in India to rise to $8 billion in 2007 from $6.5 billion in the last year.

Following FDI groups have already spread their wings in Indian real estate sector.

1.Emaar MGF has brought in the largest FDI of over US$1 billion in the Indian real estate sector. In addition, the company is focusing on pan-India projects in residential, commercial, infrastructure and hospitality sectors in integrated master plans and SEZ
2.Keppel land , a singapore based group has aleady signed JV agreement with M/S Purvankara group, banglore based group for residential and commercial project
3.DSP Merrill Lynch, Barclays Bank and Mauritius-based TH Holdings and groups have do far invested Rs.11, 460 crore in the first half of this The collective investment that got parked in real estate and construction sector was to the tune of Rs. 1,252.79 crore
4.AEA Holdings is searching for the efficient partners to expand its business horizons and wants to grab the deals and opportunities aggressively and quickly, says industry source.
6.RREEF, the real-estate investment arm of Deutsche Asset Management, is planning to invest over $200 million in a joint venture with realty major Emaar-MGF
8.Capital Land, Hong kong based group is also planning to invest in India.
7.Royal RaJ Indian, A candian group has laready has aleady signed JV agreement for residential and commercial
9.Morgan Stanley Real Estate Fund is known to have made the largest private equity transaction in property market till date and invested $125million Mumbai based Oberoi Constructions;.
10. Mauritius-based IREO Investment Holding grabs the honor of making the highest FDI in the secto With the whopping investment of Rs. 321.70 crore.The company also has plans for related projects and heavier inflows.
11.Emaar MGF Land Private Limited is India’s pioneering joint venture in real estate with projects being implemented on a pan-India basis across top 30 cities. .
12.DSP Merrill Lynch Limited, India’s leading investment bank and broking firm that pump in more than Rs 2,230 crore between April 2006 and October 2006.
13.Barclays Bank made an investment totaling Rs 1,711.23 crore pitching itself to the second investor slot.
14.Mauritius-based TH Holdings has invested of Rs.1697.35 crore.
15.French firm Carrefour has been showing interest in entering Indian retail industry
16.world’s largest financial services group, Citi, which has sewed up property deals of around $400 million in the past few weeks. This prestigious group is also looking forward to enter into a joint venture with HDFC and US based Portman Holdings.
17.Citigroup is all set to enter in the red hot property market through Citigroup Property Investors (CPI) India;
18.A Mauritus based company financed by a fund in Cayman Islands, was recently in the news to have raised $500 million through an India-dedicated fund. The conglomerate is likely to raise more money to invest in realty.
19.Hong Kong based AEA Holdings announced that it plans to invest more than $2 billion over the coming years in Indian realty projects.
20.Walt Disney a entertainment major, is investing Rs 141-crore
21.Italian firm Rino Greggio’s plan to set up a joint venture for selling silverware and UK-based Alpha Airport Group’s proposal to establish a wholly-owned subsidiary for setting up duty-free shops, flight kitchens and food and beverage outlets at airports in the country at an investment of Rs 22.5 crore was also approvedother allied products.
22.A proposal by the Netherlands-based Diageo Highlands Holdings to set up a joint venture has received clearance as well from Indian Government.
.23.Solitaire Capital Investments Pte and Solitaire Ventures Pte, a Singapore-based group are investing Rs 511-crore of in India’s booming real estate sector.
24.Mauritius-based power producer Bijlee Bharat Holdings’ plan to set up a subsidiary in India with an initial investment of Rs 308 crore,
25.NSK Limited of Japan which has committed Rs 41.25 crore to set up a new JV in Chennai
26.Spain-based Lladro Commercials S.A. will pump in Rs 5.85 crore for increasing its equity in Spa Agencies (India) from 26 per cent to 49 per cent
27.Sri Lanka-based Damro Exports Pvt Ltd’s proposal to sell furniture under the single brand name ‘DAMRO’ and Italian firm Rino Greggio’s plan to set up a joint venture
28.UK-based Alpha Airport Group’s proposal to establish a wholly-owned subsidiary for setting up duty-free shops, flight kitchens and food and beverage outlets at airports in the country at an investment of Rs 22.5 crore was also approved
29.Hong Kong based AEA Holdings announced that it plans to invest more than $2 billion over the coming years in Indian realty projects.

FACT SHEET ON FOREIGN DIRECT INVESTMENT

A. CUMULATIVE FDI EQUITY INFLOWS

1. Cumulative amount of FDI inflows (from August 1991 to March
2006) Rs. 1,61,411 crore US$ 38,902 million
2. Amount of FDI inflows during 2006-2007 (from April 2006 – January
2007) Rs.50,652 crore US$ 11,194 million
3. Cumulative amount of FDI inflows (updated up to January 2007) Rs. 2,12,063 crore US$ 50,096 million

B. FDI EQUITY INFLOWS DURING CURRENT FINANCIAL
YEAR 2006-2007

Financial Year 2006-2007 (April-March) Amount of FDI inflows
(In Rs. Crore) (In US$ mn)
1. April 2006 2,972 661
2. May 2006 2,443 538
3. June 2006 2,405 523
4. July 2006 5,235 1,127
5. August 2006 2,878 619
6. September 2006 4,222 916
7. October 2006 7,718 1,698
8. November 2006 5,157 1,151
9. December 2006 9,108 2,040
10. January 2007 8,514 1,921
2006-2007 up to January 2007 50,652 11,194
2005-2006 (up to January 2006) 18,535 4,179
%Age growth over last year (+) 173 % (+) 168 %

FDI EQUITY INFLOWS DURING CALENDAR YEAR 2007:

Calendar Year 2007 (January-December) Amount of FDI inflows
(In Rs. Crore) (In US$ mn)
1. January 2007 8,514 1,921
Calendar Year 2006 (upto January 2006) 2,141 482
%age growth over last year (+) 298 % (+) 299 %

Foreign Direct Investment is encouraged and permitted, in the following real estate sectors in India:

· Hotel Development
· Tourism
· Hospitality
· Township development
· Developing Commercial Real Estate
· Built-up infrastructure
· Housing and construction projects
· Building Resorts
· Building Hospitals
· Building Educational institutions
· Building Recreational facilities
· Infrastructure projects: regional and local level
· Special Economic Zones (SEZ)

J.K.Patil and associates,Pune /Mumnai
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  • It is an encouraging to get a peek at the FDI projects in pipeline. Let me also add here that asian markets are set to get realty equity deals worth $30 billion in the current fiscal 2007-2008. And Indian real estate can expect to get around $6 billion, a billion or two less than what Japan and China shall garner.

    And almost 94% of it shall find its way to the Tier I cities like Delhi, Mumbai, Bangalore. This doesn't mean that Tier II cities are lagging behind. They are very much in the scene with FDIs pouring in from all over. Most recent tie-ups include a deal worth $10 billion between Nakheel Group of Dubai and DLF for residential complexes.
    SO the FDI scene is hot as of now. Thanks to the growing and lucrative Indian economy!!
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  • thanks for the great fatcs

    great info!!! Do you have any more info on IREO activities/investments?

    Thanks in advance,
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  • hmmm ...... knowledgeble information.

    Thanks
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  • Originally Posted by Manoj Misra
    great info!!! Do you have any more info on IREO activities/investments?

    Thanks in advance,


    I have not understood your exact interest? what exactly you want to know about IREO activities/investment? On hearing from you, probably , i may provide you some useful data.
    J.K.Patil and associates.
    CommentQuote
  • Cash on Cash Yields

    Can anyone provide some NOI yield figures for recent retail property transactions? If not, any estimates for what approximate yields might be?
    CommentQuote
  • I have a question about...

    Is it really true that people have a greater chance of dying while going in a car to the airport than actually on the flight itself? I will be flying from New York to Seattle and I am afraid I will die?
    CommentQuote
  • Developing Nations are the Most Lucrative FDI Destinations- ASSOCHAM

    Major developing economies like India and Saudi Arabia have emerged as the most attractive destinations for FDI after the global economic meltdown , industry body Assocham said today. “The FDI inflows into the developed countries registered a sharp decline of about 30 per cent in 2008, while the developing nations have experienced an increase of about 17 per cent and sustained their uninterrupted inflows,” it said.
    It said that China is leading as the priority host economy for FDI amongst the developing economies and also the second largest FDI recipient in the world. Besides, Hong Kong, Russia , Saudi Arabia and India are other countries attracting maximum FDI, it added. “The potential impact of the economic crisis enforce the shifting of geographical focus to developing and transition economies because of their much better economic performance than the developed countries,” Assocham said.
    Factors such as weaker economic growth in developed countries and abnormal functioning of the world credit are putting pressures on the pace of recovery of FDI flows.
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  • World Bank Projects 17% Growth in FDI Inflows into Developing Countries

    The foreign direct investment flows (FDI) into developing countries including India, is expected to recover over the next couple of years and is projected to increase by 17 per cent in 2010, a World Bank report said. The report — World Investment and Political Risk — which was launched by the World Bank’s Multilateral Investment Guarantee Agency (MIGA) said the net FDI inflows into the developing countries is projected to touch $416 billion in 2010, up from its 2009 level of $354 billion.
    Overall, FDI inflows to the developing world continues to be “overwhelmingly” concentrated in middle-income countries, with Brazil, the Russian Federation, India, and China (BRIC) alone absorbing about half, the report said. Net private flows (which include FDI and portfolio equity flows, as well as debt from private creditors) are projected to rebound in 2010 and 2011, but to remain substantially lower than their $1.2 trillion peak in 2007.
    FDI prospects appear brighter for developing countries in 2010 and beyond: their economic performance is expected to outpace that of high-income economies as their domestic demand is buoyant, the report said.
    “This upsurge in FDI into developing countries is welcome news, especially considering last year’s drop,” MIGA Executive Vice President Izumi Kobayashi said. FDI into developing countries declined by 40 per cent last year. Kobayashi noted that “FDI flows directed to productive assets can spur economic growth and reduce poverty.”
    FDI can help generate and sustain economic growth and development by providing much-needed financial resources, technology transfer, managerial expertise, and connections to the global economy, the report said. “Economic growth is critical for all of us around the globe but it is even more so for underserved markets — those economies that have been struggling under the very heavy burden of conflict and instability,” Kobayashi added.
    The MIGA report said executives from multinational companies across the world believe that despite the various problems being faced by the developing world, such as lack of finance and quality of infrastructure, the biggest worry is “political risk”. The top worry of multinational executives when operating in developing countries over the next three years is political risk, and a fifth of the investors surveyed use political risk insurance to mitigate this risk.
    The report, which also focuses on FDI into conflict affected and fragile economies, said investors there are mainly concerned about adverse government intervention rather than overt political violence as adverse changes are often responsible for losses in these destinations.
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  • Global Retail Majors Expected to Enter into Indian Retail Sector in 2011

    If consolidation was the buzzword for the retail sector in 2010, the coming year is expected to see some big-bang entries of global retail majors as the sector looks forward to a positive outcome on the relaxation of FDI norms in retail. Even while India added around 5 million sq ft of retail space in 2010, some stores were relocated and some unviable ones faced closure. Once-lucrative businesses were bought out.
    While Vishal Retail was acquired partly by Shriram Group and partly by private equity fund Texas Pacific Group, Indiabulls, which had acquired Piramal’s Piramyd Retail in 2007, put its retail expansion plans on hold to focus on its main businesses of financial services and real estate. Yet, with the lessons learnt from the past few years, prudent modern retailers managed to clock double-digit growth rates. Same store growth was well above 15%.
    According to Thomas Varghese, CEO, Aditya Birla Retail , 2010 can rightly be called a revival year as “starting from the budget announcements to modifying income tax slabs, good salary increase across sectors and a fairly good monsoon—all aided in driving consumption across categories” . The revival though, had to overcome hurdles such as high rentals , attrition, higher cost of compliance and low investments flowing into the sector.
    According to Varghese, the recession was a blessing in disguise for the retail industry. Though it slowed down the pace of growth, it helped retailers to introspect and revisit their business models. As a result , strong business fundamentals took over ambitious expansion plans, which warranted restructuring exercises , relocation of stores and renegotiating rentals. These initiatives helped improve the profitability and viability of different retail formats and also enabled retailers to innovate , adopt best practices and bring in efficiencies in their operations. “I am confident that rich learning from the last couple of years will enable them to expand and build a sustainable business,” said Varghese.
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  • Realty Foreign Direct Investment (FDI) May Need FIPB Nod

    Sensing the need to increase the vigil on the foreign direct investment (FDI) in real estate and pharma, the government is planning to shift these two sectors from automatic approval system to the FIPB route.
    As for the real estate sector, the department of industrial policy and promotion (DIPP) is of the view that it should take immediate steps to limit hot money flowing into the sector. Moreover, the government would also audit real estate projects for which the FDI is being brought in as it has received complaints of realty players diverting funds to projects including buying agriculture land for which FDI is not approved.

    These key changes would be incorporated in the bi-annual FDI policy review due in April.

    Since real estate companies are not allowed to raise external debt, there are reports of them using hy-brid instruments like compulsory convertible debentures and offshore special purpose vehicles for borrowing abroad and then funneling the funds to the parent in India as FDI.

    RBI wants real estate removed from the list of sectors where FDI can come in through the automatic route. At present, up to 100 per cent FDI is allowed in realty projects on automatic route with certain conditions like a three-year lock-in on investments and minimum capitalisation of $5 million.
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