‘Indiabulls Real Estate has recently raised Rs 20 crore through issue of non-convertible debentures on private placement basis’. ‘Motilal Oswal Real Estate, the private equity real estate fund of Motilal Oswal Group, has raised around 800 crores for investment in residential projects’.These are two very important developments of the recent times. These investments are enough to suggest the interest of investors is kicking-up and alive in the real estate sector again.
According to Henry Chin, head of research for Asia -Pacific at property advisory firm CBRE, real estate market in India is again back with a bang. This is due to global investors interest in Indian market again, courtesy ‘the decline of China Market’. The credit for this goes to the Government of India for their hard work and efforts.
Off late large institutional investors such as Blackstone, Brookfield, JP Morgan to name a few are all investing hugely in Indian real estate. Most recently Wanda Group, of China fame also proclaimed their interest in developing projects in India. In Spite of a slow progression report in the residential sector in few quarters, the office segment has shown improvements and the trend seem to only grow. According to Mr. Chin, Bengaluru was one of the strongest among all Asia Pacific markets last year with respect to office space leasing. The main demand is, of course, coming from the IT and BPO sectors. The sectors such as pharma and banking services are also not lagging much behind. Furthermore, e-commerce sector has further aggravated real estate demand pertaining to their need of logistics and warehouses.
Indian real estate market has almost found a new zeal. Veterans such as Vishal Tulsyan, CEO of Motilal Oswal Private Equity Investment Advisors admits that over the past few years real estate has become their one of the important part of business propaganda under their private equity business. They plan to grow this vertical further. Apparently, Motilal Oswal Private Equity currently manages a total AUM of Rs 2,000 crore under their real estate equity. Other players such as Indiabulls is developing with 11 projects under their real estate sector. The total saleable area under these project is 30.51 million sq ft.
There is also a grown demand for sustainable building projects and more investors are likely to join this journey soon. IGBC, LEED, GRIHA are getting structured with each passing days. Sustainability and energy compliance has become a serious business.
However, no journey is paved without hassles and Indian market too is not an exception. According to Mr. Chin, Indian real estate market is still at its halfway. There is a huge scope for improvement in the regulatory structure and taxing details. SEBI’s proposal of relaxing norms for Real Estate Investment Trusts [REIT] and the permission of more investments in the under construction projects have been submitted for acceptance. If this proposal gets passed REITs will be able to invest to 20% more in under-construction projects compared with 10% currently allowed.
Real estate in India is slowly climbing up the ladder, once the reforms are passed we can see exponential growth very soon.
Curated by editor at Wienerberger India