Session Highlights

Global Funds: Are they here yet?

Allowing foreign companies to set up propertiesin India is attracting overseas investment, reports Savio Rodrigues

Since 2005, leading international and domestic venture capital companies and private equity investors have been vocal about their intentions to flood the Indian real estate and hospitality sector with greenbacks. However, the actual realisations of such announcements have been negligible. The session 'Global Funds - Can They Help' at HICSA 2006 attempted to address the conundrum.

Bullish on the real estate segment

"The Indian real estate sector is upward bound. Positive economic outlook, conducive interest rates, increasing purchase power, suburban development models and reforms in the real estate industry are some of the factors which have been contributing to the growth of this sector in recent times especially the hospitality industry," expressed Prem Subramaniam.

The modifications of the FDI norms for the realty sector coupled with opening up of the real estate funds would result in a paradigm shift with professional players, bigger projects and more transparency in the industry. The modified FDI norms for the real estate sector make it more construction-centric rather than land-centric. According to Hansing, "The new reforms will not only generate employment but also spur on development of infrastructure mainly because more projects will spur more job opportunities for the industry."

Broadening investors choice

The advent of real estate investment schemes will provide much desired liquidity in the market. Allowing foreign companies to set up properties in India is attracting overseas investment. "Real estate finance now will be better structured, more equity based than debt," elucidated Shah.

Looking ahead into the future, the expanding Indian economy, improving property fundamentals in major markets across Indian cities and shortage of other yield-producing assets suggest increasing investment and capital inflow in this sector in the short to medium term. "Creation of real estate stock is a factor, which will influence the growth trajectory of the real estate sector, particularly in hospitality. Further, the right mix and appropriate location will prove to be the deciding factors for real estate investments market," said Sriniwasan. According to Venkatchalam, the relaxation of the external commercial borrowing norms for the real estate sector is a welcome move on the government's path but a lot more needs to be done to remove the remaining bottlenecks for investments into this sector.