Global developers eye Indian real estate

Global property developers are eyeing the Indian real estate market for investments in a big way.International property developers Westport Malaysia, Emaar Group,SEMCORP, JTC and IJM are some of the firms which have already entered the country either directly or through joint ventures for property
development. Joygopal Sanyal, the head of property consultancy firm Chesterton Meghraj, said, "With most developed markets showing signs of maturity, India offers a big opportunity as real estate yields are on the upside here.

The residential property market price index is already up. Transparency in the Real estate markets have improved drastically."

According to industry experts, global developers are making a beeline for India as the country is opening up its infrastructure sector.

Most global real estate developers see future in the country as there will be a need for 16 million more houses at the national level by 2007. Other opportunities include development of government and private mill lands and railway properties.

However, a few operators said that certain norms on realty investment are hindering the flow of foreign direct investment into the sector.

At present, foreign direct investment is permitted only for integrated development on 100 acres of land or more with a capital investment of $10 million for a wholly owned subsidiary and $5 million for joint ventures with Indian partners.

"The requirement that a minimum of 50 per cent of the integrated project development must be completed within five year from the date of possession of the land is another stiff condition which keeps global developers away from direct FDI," said an official with property consultancy Cushman and Wakefield.

According to officials with CB Richard Ellis, Gurgaon still remained a preferred destination for corporates that wanted space in Delhi. Noida, according to them continued to attract IT enabled service companies due to its infrastructure in terms of transport and telecom facilities, lower rentals and capital values.

"Falling interest rates, coupled with the increase in FDI and a positive stock market, has resulted in increased activity in the real estate market in Delhi.

Although there has not been any appreciable enhancement in the values, the heightened levels of transactional activity across all segments augur well for the market," they added.