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October, 2006
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Home  Hyderabad Related Real Estate
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Written by hyderabadi
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Tuesday, 17 October 2006 |
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India’s real estate investment market has grown rapidly over the past three years. Average return of around 50% per annum in the sector for last four years has attracted huge investments from various quarters.
The main sources of investments in the sector are high net worth individuals (HNI), private equity funds and now the foreign direct investments (FDIs) as the government has partially relaxed FDI regulations in February 2005.
According to global consultancy firm CB Richard Ellis, the response from foreign investors is ‘‘absolutely overwhelming’’. In a report the firm says that by varied estimates, more than $15 billion (Rs 70,000 crore) of foreign funds are awaiting investments into India. In the last one and a half year, domestic realty funds have also raised $4.5 billion (Rs 20,500 crore) to invest in the real estate sector. However, there is no official estimate made on the investment from HNI group. But according to banking sources the amount could be anywhere around Rs 1 lakh crore.
MD of CB Richard Ellis, South Asia, Anshuman Magazine says that the money is not a big problem for the real estate sector, the problem is the availability of good quality investment opportunities in the country. If the real estate market becomes more transparent, the fund flow would improve.
The good news is that things are improving. According to Jones Lang LaSalle’s latest Global Real Estate Transparency Index (2006), India has achieved one of the region’s most significant improvements in real estate transparency over the past three years. Moreover, the increasing participation of foreign investors and the emergence of new investment vehicles including the introduction of REITs will continue to force the pace of structural change.
However, as large amount of funds are chasing few good projects in Tier I and Tier II cities like Delhi, Mumbai, Bangalore, Pune Hyderabad and Chennai, the prices have gone up substantially in the last four years, reducing the expected returns on investment. However, the return could be maximised if one chooses the right locations and segments. JLL points out that India is a vast and diverse country, and risks can be reduced by careful selection of location and segment like residential, commercial and retail. Suburban offices, retail and the residential sectors are likely to offer the greatest opportunities over the short and medium term.
Commercial office
The demand for offices in suburban market is likely to grow at more than 30% annually. Strong growth in emerging sectors such as IT and ITES telecoms, financial services, pharmaceuticals and biotechnology will also boost demand and broaden the occupier base, the report points out. State-of-the-art campus developments are expanding rapidly, and sale & leaseback opportunities are emerging.
Residential
Favourable demographics, urbanisation, rising incomes and easier access to finance are fuelling strong demand for residential accommodation. India has an acute shortfall of housing in urban areas of over 20 million units.The rise in the interest rates might affect it temporarily but if the overall growth is maintained, the demand will continue to grow. . |
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Last Updated ( Monday, 06 November 2006 )
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