| In the new millennia of real estate India has | | | | that were nearly impossible to achieve in the US |
| emerged as strong, swift and bold player. | | | | and European markets today. |
| Industry expert’s believe that the Indian | | | | Industry sources more than 90 foreign investors |
| real estate has huge demand potential in almost | | | | are already in the country tapping into the real |
| every sector, be it commercial, residential or retail. | | | | estate investment avenues in India. Dozens of US |
| "India is the most exciting real estate | | | | funds are being raised for investments in Indian |
| market in Asia," says Michael Smith, head of | | | | realty. Those raising the funds include Blackstone |
| Asian real estate investment banking at Goldman | | | | Group (US$ 1 billion) Goldman Sachs (US$ 1 billion), |
| Sachs. "It's one of the last major countries | | | | Citigroup Property Investors (US$ 125 million), |
| in Asia with an improving market." | | | | Morgan Stanley (US$ 70 million) and GE |
| The Real Estate explosion | | | | Commercial Finance Real Estate (US$ 63 million) JP |
| This spurt of growth in the Indian real estate is in | | | | Morgan, Warburg Pincus, Merrill Lynch, Lehman |
| large part due to the by the burgeoning | | | | Brothers, Warren Buffett’s Berkshire |
| outsourcing and information technology (IT) | | | | Hathaway, Colony Capital and Starwood Capital, |
| industry. By 2010, the IT sector alone is expected | | | | and believe it or not this is just the tip of the |
| to require 150 million sq.ft. Of space across major | | | | ice-berg. |
| cities .New companies means new offices, houses, | | | | Morgan Stanley closed a deal worth about US$ |
| shops in short commercial, residential and retail | | | | 150 million with Oberoi Constructions in Mumbai. |
| space. | | | | The Nakheel Group in Dubai entered into a US$ 10 |
| This growth is facilitated by favorable | | | | billion deal with DLF for residential projects in Tier |
| demographics, increasing purchasing power, | | | | I and II cities. This was followed by three financial |
| existence of customer-friendly banks and housing | | | | institutions -- Khaleej Finance and Investment |
| finance companies, professionalism in real estate | | | | (KFI) from Bahrain, Kuwait Investment Company |
| and reforms initiated by the Government to | | | | (KIC) and Kuwait Finance House (KFH) -- from the |
| attract global investors. People have more | | | | Middle East promoting a US$ 200 million fund for |
| purchasing power and exposure to organized retail | | | | investing in India. |
| formats has redefined the consumption pattern. | | | | Players At Home |
| Even small towns want to emulate the culture of | | | | Investors back home have also sat and started |
| their big city cousins. As a result, retail projects | | | | taking active participation in the real estate |
| have been mushrooming across even B-grade | | | | segment. Indian financial institutions are competing |
| cities. | | | | with each other. Prominent companies promoting |
| This new way of life has quite drastically changed | | | | real estate funds in India are HDFC Property Fund, |
| the face of India’s real estate, may it be | | | | DHFL Venture Capital Fund, Kotak Mahindra Realty |
| the city centers the urban areas or the new | | | | Fund, Kshitij Venture Capital Fund and |
| yuppie towns. Small shops, old fashioned | | | | ICICI’s real estate fund, India Advantage |
| bungalows and office blocks have all changed into | | | | Fund. |
| luxurious apartments, with club-houses, pools and | | | | The Tata group has also joined hands with private |
| sprawling greens. Instead of small shops we have | | | | equity firm, Xander, to raise US$ 1 billion for an |
| humongous sprawling malls and office complexes. | | | | institutional retail real estate fund. DLF has raised |
| The Global Effect | | | | US$ 2.24 billion in the country's largest initial public |
| When Farallon Capital Management, a U.S. hedge | | | | offering and has also entered into a joint venture |
| fund, and its joint-venture partner, Indiabulls, | | | | agreement with Indian pharmaceutical major |
| snapped up an 11-acre property in central Mumbai | | | | Ranbaxy group company Fortis Healthcare to set |
| in March 2005 for $54.5 million an acre, the | | | | up hospitals across the country with investments |
| purchase was called an act of idiocy by local | | | | of about US$ 1.5 billion. |
| developers. A few months later, when the same | | | | Conclusion |
| joint venture offered $95.5 million an acre for a | | | | But with the boom comes the crunch, property |
| nearby property, this was the second-lowest bid. | | | | prices in India are rising fast, real fast and not just |
| The first dynamic impact that announced a global | | | | in the biggest cities. As the tech boom spreads |
| change in the Indian real estate sector came | | | | across the country, and as more Indians buy |
| when the Government introduced new policies in | | | | homes, and as the economy grows at faster |
| February 2005. It allowed 100 per cent foreign | | | | than 8% a year, real estate is attracting more |
| investments in construction projects with | | | | investors, many of them from abroad. |
| fast-track approvals. But the fatal attraction for | | | | It is really no longer going to be cheap or easy to |
| foreign investors was the potential investment | | | | be a player in the Indian Real Estate Game. |
| returns of 25 per cent or more in Indian projects | | | | |