With development extending in all directions including tier-II and tier-III cities, the Indian real estate sector shows an appetite for greater growth.
The Indian real estate market is riding the growth curve. Private equity funds are investing in the burgeoning market and buyers are becoming much more savvy, thanks to globalisation of the real estate market.
The real estate market in India is worth $12 billion (about Dh44.07 billion) and is growing at almost 30 per cent a year, according to an Ernst & Young report commissioned by the Federation of Indian Chambers of Commerce and Industry. With this growth rate and projected figures of $90 billion (about Dh330.5 billion) by 2015, it can be safely said that the real estate sector in India is booming.
Why India
India has a young profile today. Half its population is under 25 and the country's median age is 24 years (2005). The country is also urbanising at a rapid rate of 2.5 per cent per year. Mumbai and Delhi are projected to be the world's second and third largest cities by 2015. Tier-two cities such as Pune, Hyderabad and Chennai are becoming increasingly important in this scenario.
The Indian real estate market is expected to have access to about $10 billion (about Dh36.72 billion) in private equity (PE) funds this year. Yatra Capital Limited, the first Euronext quoted company investing in Indian real estate, has committed 17.86 million euros (about Dh103.69 million) for a mixed-use development in Palladium Constructions Pvt. Ltd.
Nigel Broomfield, Chairman, Yatra Capital Limited, says, "We are happy to announce Yatra's presence in Bangalore. With these investments Yatra would have a presence across asset classes in a key investment destination in India."
PBEL, a joint venture of two top Israeli real estate firms and an Indian developer, has announced that the company would invest Rs 40 billion (about Dh3.67 billion) over the next three years in real estate projects in India. The company officials announced that it had already invested Rs5 billion (about Dh459 billion) to purchase 125 acres of land for four projects in Hyderabad, Chennai and Mysore.
Meir Boukris, Director and Founder, PBCL, says, "India is one of the most attractive countries in the world economy. It has high growth rate and there is appetite for more growth. To begin with, we are focusing on southern India as the region has high growth potential.
"We look forward to more investment opportunities in India, focusing mainly on tier-II cities."
The second home segment has also caught on in India. Apart from a home in the UAE, buyers are also looking at places such as Navi Mumbai (a fully planned city), Goa, Alibaug, etc. While easy air connectivity and the potential for good rental returns and higher capital appreciation has worked in Goa's favour, proximity to Mumbai and upcoming infrastructure projects have been the trump card for Alibaug. Also, the recently sanctioned Special Economic Zone (SEZ) plan is great news to all investors in an around Alibaug.
India beckons
If you think all the activity is concentrated in the metros, think again. The real estate awakening has spanned all directions and several tier-II and even tier-III cities in India.
Mumbai leads the residential financing market with a share of 10 per cent, followed by Delhi and Bangalore with nine and seven per cent, respectively.
Although the residential financing market space in India is about Rs1 trillion (about Dh92.08 billion) and the market in Kolkata is around Rs20 billion (about Dh1.84 billion), it is expected to grow at a much faster rate compared to the other metros in the next two to three years.
Ajoy Veer Kapoor, Director, Saffron Capital Advisors, says, "Bangalore offers tremendous opportunities for real estate players looking for investments with good risk-reward profiles."
Once a quaint town down south, today Cochin finds itself in the big league, thanks to the Cochin Export Processing Zone and projects such as Smart City that have fuelled the real estate boom in Cochin and its suburbs. Property developers such as Skyline, Meridien Homes, Puravankara and SRK group have investments in plush projects here.
Chennai also has demand for premium housing apartments as well as budget flats. Puravankara Projects has established itself as a high-end residential developer in the south.
Hyderabad has also attracted several big players in the market. Lanco Hills Technology Park Pvt Ltd and Sembawang Infrastructure India Pvt Ltd have signed an agreement for execution of the structural work of Tower 9 for their SEZ IT Park. Lanco Hills is a mega project coming up on 108 acres in Hyderabad. S Pochendar, CEO, Lanco Hills, says, "When completed, this whole project will be one-of-its-kind with the best of infrastructure and amenities anywhere in the world."
Moving up north, Noida — the largest industrial town of Asia, is seeing several plush residential projects, thanks to the influx of working professionals.
Ghaziabad has some excellent commercial projects as well because industries, BPOs and multinationals are seriously looking to set up their offices here. Gurgaon too has some impressive upscale residential projects. Retail space in Gurgaon comes for a premium.
Not to be left behind, the smaller cities in India are also attracting big players. Parsvnath Eleganza is a mall-cum-multiplex being developed in Dehradun. Pradeep Jain, Chairman, Parsvnath Developers Ltd, says, "Parsvnath Eleganza will change the paradigms of real estate and entertainment standards in this town."
Known for its textile units, Bhilwara is today attracting real estate developers in a big way. Realty majors such as Ansal Group, Manglam and Essel Group have changed the face of the city.
Best on offer
The infusion of foreign players and funds in the realty sector has ensured that the customer, who can afford it, gets the best. Imagine a private parking bay on each floor, exclusive elevator for each apartment and ultra-luxurious amenities such as a manicured garden and a lotus pond thrown in.
From swipe-card activated private elevators that open into each residence and universal touch-screen panel controlling the home electronics to net-enabled remote access for your home and cell phone-controlled appliances, modern architecture meets state-of-the-art technology.
The NRI connection
Leading real estate developers such as Sobha Developers, DLF, Kalpataru, Nitesh Estates, Unitech, Omaxe, Royal Palms, Lodha Developers and Marvel Realtors are developing projects in cities such as Mumbai, Delhi, Pune, Goa, Bangalore and Kerala, with the price of an average luxury home varying between Rs30 million (about Dh2.76 million) and Rs 500 million (about Dh46.04 million).
Sales to NRIs are especially high in states such as Punjab, Kerala and Gujarat. Coupled with Hyderabad, these states account for the maximum number of NRIs. Places such as Bangalore, Hyderabad, Ahmedabad, Pune, Indore, Agra, Sonepat, Panipat and Moradabad are also attracting buyers from this segment.
Interestingly, while property prices have increased in India by as much as 50-100 per cent in the last three years, the price increase has barely affected the demand from NRIs. The Indian property market offers a minimum of 15 per cent returns on investments a year.
Event essentials
- Home Owner India
- Dates: April 11 and 12
- Venue: Madinat Arena
- Organiser: Motivate Events
