It’s our Asian neighbours who are betting big on the real estate sector in the first phase of foreign direct investments FDI) into India.
MUMBAI: It’s our Asian neighbours who are betting big on the real estate sector in the first phase of foreign direct investments (FDI) into India.
Though the exact value of the total real estate projects planned in India is not available, if you go by the number of projects lined up by companies from different parts of world, firms from southeast Asian countries such as Singapore, Malaysia and Indonesia seem to have cast a lusty eye on India.
According to the Knight Frank India Research data, eight of the 13 residential projects proposed by foreign players in India are by companies in the southeast Asian region. Players from the US, UK, Middle East, Canada and Japan have floated one project each.
“Southeast Asia nations, especially Singapore, are very bullish on Indian real estate sector. The main reasons for this is the proximity of these nations to India and the similarly in their markets. Also, Singapore firms are putting in huge funds into India because their real estate market has almost saturated and India is one of the lucrative options for them,” says Trammell Crow Meghraj managing director Anuj Puri.
According to A T Kearney’s Global Investor Confidence Survey 2004, India has been ranked the third most favoured destination for FDI after China and the US.
A report brought by property consultant Knight Frank reveals this soaring investor confidence in India is also reflected in the real estate sector. In less than a year since the liberation of FDI norms, overseas investors are flocking to tap the latent potential in India.
Major developers and fund houses such as Lee Kim Tah Holdings (Singapore), Salim Group (Indonesia), High Point Rendel (UK), Edaw Ltd (US), Kikken Sekkel (Japan), CESMA International Pvt Limited (Singapore), Emaar Group (Dubai), IJM (Malaysia), Evan Lim & Co Pte Ltd (Singapore), HO Hup Construction (Malaysia), Keppel Land (Singapore), Royal Indian Raj International Corporation (Canada) and Universal Success Enterprise (Indonesia) are planning integrated township projects in India. Other segments like IT parks, special economic zones (SEZ), infrastructure, and hospitality are also as enticing to foreign investors.
Southeast Asian players also dominate investment in IT parks, SEZ and infrastructure projects. Singapore-based Ascendas India has developed the International Tech Parks in Bangalore, Gurgoan, Hyderabad and Chennai, and acquired the Vanenburg IT park in Hyderabad from its original promoters.
The company now plans to develop IT parks in Pune and Kolkata. Indonesia’s Universal Success Enterprise Ltd has signed a memorandum with Delhi-based developers Unitech Ltd for developing an IT park in Kolkata.
Of the two foreign firms which have evinced interest in setting up SEZs in India, one is from Singapore (SembCorp Engineers and Constructors Pte Ltd) and the other is Houston-based Hines.
Its different story, though, in the hospitality sector. Major names from the US and UK like Starwood Capital, Hyatt, Paramount Capital and New Vernon Capital have already invested in hotel chains in India. One of world’s largest hotel and tourism firms
Accor has also announced pan-India investment to the tune of $200 million.
For this, it has tied with Delhi-based InterGlob Enterprises. Together, they plan to develop 25 ‘ibis’ brand of economy hotels across India and South Asia over the next 10-12 years.
Interestingly, real estate consultants say 2006 will see the US and UK investments rise.
“Firms from the US and UK had adopted the policy of wait and watch. They wanted to see how FDI works out for the SEA players. With most investors having had a fairly good experience in the Indian market, we expect FDI from US and UK flow into the country this year,” says Puri.
Till then, the SEA companies have the whole real estate field of FDI to themselves.
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