There is great news for the Indian real estate sector. According to a report titled ‘The Great Wall of Money’ by the global real estate consultant Cushman & Wakefield, India has emerged as one of the preferred investment destinations this year. The country’s real estate sector is expected to attract investments worth USD 4.2 billion (approximately) in 2017.
Post demonetization, the sector was going through a comparatively low phase. However, after this report, things look positive and would soon turn around for the sector. The stability of the government at the center, reiterated by the recent win of BJP in Uttar Pradesh state elections, has increased India’s attractiveness as a global investment destination. The present government has formulated numerous policies and initiated laws in the past year, such as RERA (Regulation and Development) Act, GST (Goods and services Act), phasing out of the FIPB (Foreign Investment Promotion Board) and introduction of REITs (Real Estate Investment Trust), which have been directly responsible for attracting such a huge amount of FDI into the sector. Projects like ‘Housing for All By 2022’ and ‘Construction of 100 Smart Cities’ will further boost the growth of the industry.
According to the Cushman & Wakefield report, USD 435 billion worth capital is available for global real estate investment in 2017. Asia-Pacific region, comprising of countries like China, India, Singapore, Japan and Hong Kong, amongst others, will attract almost thirty percent of this, owing to the maturity and growth of opportunities in these markets. India in particular is attractive to investors right now due to the country’s strong political will to propel and protect investment growth.
Core office markets in India and office spaces are providing strong rental returns at the moment. Also, compared to other real estate segments, office markets provide easier exit options. This is the segment which is expected to attract a major portion of this new global capital into India. The investment in office sector is likely to double this year.
Due to the anticipated economic growth once the government’s policies and laws start showing results, coupled with the positive sentiment in the country, has inspired global investors to look at India as a destination where they can park their funds long-term. The increased FDI will ensure that the real estate developers will soon be in a position to raise large amounts of capital, that too on better terms and in shorter time duration. This will reduce the cost considerably for the developers, resulting in higher profit margins. The growing inflows of FDI in the Indian real estate sector will bring in transparency as the developers are expected to revamp their accounting and management systems to attract funds. Lower costs and transparency will ensure that the demand for real estate remains consistent. Overall, $4.2 billion worth of FDI will help the sector reach new heights!