According to a Cushman & Wakefield report, real estate investment in India’s six major cities doubled to $2.87 billion in the year ending June 2017. The reforms initiated by the government in the past one year are finally showing positive results and the economy is jet setting towards success. Mumbai, Bengaluru, Pune, Delhi-NCR, Chennai and Hyderabad are the Indian cities where real estate investments are booming! Mumbai, with investments to the tune of $1,749 million, has attracted the maximum capital and has been ranked 81 st in the world, in terms of realty investments.
There are a number of factors which have contributed to the thumbs up given by investors to the Indian real estate market. First and foremost, measures such as Real Estate (Regulation and Development) Act, goods and services tax and grant of industry status have lend credibility to the sector. The political stability provided by the present government, coupled with the positive perceptions about the economy has ensured the investors that their capital is safe, resulting in this huge volume of investments. The investors definitely see medium to long term growth potential in the Indian cities, not only in the established markets of Mumbai, Bengaluru and Delhi NCR, but also Pune, Hyderabad and Chennai owing to they being manufacturing hubs for automobiles, engineering goods, white goods, pharmaceutical products, etc.
According to the report, the city which saw the maximum investment growth is Pune, as much as 285 percent from previous year. It outshone the financial capital of India – Mumbai, which witnessed a 194 percent growth compared to last year. The report which surveys over 400 locations worldwide, has placed Bengaluru at 161 position, with total real estate investment volume of $461 million.
Analyzing the investments, the report further states that the majority of these, almost 55 percent, came from North America. European investors see potential in the Indian real estate market and contributed about 14 percent of the total investment share. However, domestic and regional investors were a bit shy of investing in real estate this year and hence the share of this group in the total investments saw some decline.
Another report on Indian real estate by PwC states that international investors in India are preferring commercial properties over residential. In Mumbai especially, retail sector is drawing more interest from foreign investors. Unconventional asset classes, like co-working spaces, are also finding a lot many investors.
The huge investments in Indian real estate market indicate that investors are very positive about its future. The investors are firmly standing behind the reforms initiated by the Government. Due to the implementation of the RERA, although the pace of new launches in 2018 will be greatly reduced, the developers will focus on completing existing projects, which will in turn lend credibility to the sector. The introduction of GST is helping in a shift in demand towards completed properties as they have lower taxes. The focus in the coming years will be on completing the projects, resulting in lowering of unsold inventory. This combined with huge investments is expected to contribute a great deal towards the sector’s revival.