Owing to regulatory reforms, the outlook of global investors on Indian real estate has been turning positive. The policy initiatives, including the implementation of the Real Estate Regulatory Act (RERA), will make real estate reliable and attractive for large institutional investors. Christian Ulbrich, CEO of JLL told in an interaction that, India is clearly moving in the right direction which is inspiring confidence among global investors looking to invest in regions with a long-term view.
Current Views of Foreign Investors on Indian Real Estate
Last year, India grew the fastest among major economies worldwide at over 7%. It will continue to drive global growth in 2017, with its share in the world GDP expected to rise to 17%. On the back of very positive changes in its regulatory framework, India is now a lot more attractive to foreign investors.
More Fortune 1000 companies are now looking at increasing their exposure in India. Efforts towards ‘ease of doing business’ and overall policy framework are attracting global investors, which is improving the country’s ranking.
Foreign developers are actively pursuing strategic partnerships and are looking to forge more joint ventures in India, and Asian developers–particularly from China and Japan –will be investing about $3-4 billion into the country’s real estate sector over the next three years. They are primarily focusing on mega industrial projects.
Accountability and transparency with RERA
In JLL’s 2016 Global Real Estate Transparency Index (GRETI), India’s tier-I cities edged up the 36th rank on the back of improvements in structural reforms & liberalisation of the foreign direct investment (FDI) policy. The 36th spot is among 109 countries and accounts for an improvement of 4 positions. Today, Indian tier-II cities rank higher than China’s tier-1.5 & tier-2 cities. Investors increasingly look at geographically diverse cities, local data availability & coverage.
The enactment of the Real Estate (Regulation and Development) Act and arrival of a reliable real estate regulator will play a key role here.
India as a prospective REITs market for global investors
India has a massive REIT potential, with around 229 million sq. ft of office space currently being REIT-compliant. Moreover, as India’s stock of Grade-A and superior Grade-A commercial assets grows, it presents great opportunities for REITs and scores of their potential retail investors.
Pricing and investment
India is home to six of the world’s 30 most dynamic cities. In JLL’s City Momentum Index (CMI) 2017, the country’s primary IT and technology hub –Bengaluru –sits right on top. Indian real estate has attracted about $32 billion in private equity so far. The global capital flows into Indian real estate in 2016 stood at nearly $5.7 billion. Globally, capital allocations to real estate are growing. Investors are demanding further improvements in real estate transparency, and expecting the standards in real estate to be at least on a par with other asset classes.
Information Source: ET Realty