Source: Times News Network

A Global Zeroing in on Indian Real Estate

The past year has seen a host of new global real estate developers entering India, clinching equity deals to build residential townships and work on housing projects. According to real-estate dealers, 2005 saw around eight new global property developers enter India from USA, UK, Malaysia, Singapore, Indonesia, Japan, Dubai and Canada.

Industry officials say the opening up of the infrastructure sector including the construction of large-scale residential complexes across the country has excited international players who can smell big time opportunities in the Indian real estate market. Most global real estate developers view India as a big market, as the country will require around 16-million additional houses by 2007. Other opportunities include development of large supplies of government and private mill lands, railway properties, port trust land and other public land.

Developers like, Lee Kim Tah Holdings of Singapore, High Point Rendel of UK, Edaw of the US, Kiken Sekkel of Japan, CESMA International of Singapore, Evan Lim &Co of Singapore, Ho-Hup Construction Company of Malaysia and Keppel Land of Singapore have all picked up equity stakes in various township projects in Chennai, Kolkota, Jharkhand, Vijaywada, Hyderabad and Bangalore.

Westport Malaysia, the Dubai-based Emaar Group, SEMCORP, JTC and IJM have already entered India either directly, or through joint ventures focused on property development

"The year '06 will see more such companies entering India. With the recent amendment in government's foreign direct investment policy relating to investment in townships, which reduced the minimum area required for development from 100-acres to 25-acres, a lot of foreign funds will pour into India." according to Pranay Vakil, Chairman, Knight Frank India.

Earlier, a minimum 100-acres integrated development was required for real estate FDI, and a minimum capitalisation norm of $10-million for a wholly-owned subsidiary, compared with $5-million for joint ventures with Indian partners.

Cushman and Wakefield, a real estate consulting firm believes most the real estate sector in developed markets is showing signs of maturity, whereas India offers huge opportunities as real estate yields increase. With the residential property market price index already up, real estate market transparency has improved drastically, as well.

As the globe zeroes in on Indian real estate, what Gandhi said about the real India living in its villages, will no longer hold true. Developers moving in have sent land prices shooting skywards, and small time farmers with small holdings are no longer content to till their land, selling it for prices, previously unheard of. The exodus begins, with villagers coming to town and the city folk settling down in what was once upon a time the soul of India, villages of rural India transformed into townships and housing complexes that wouldn't seem out of place across the globe.