Indian Real Estate Market High on NRI Investment
Thursday, September 06, 2007
The real estate story in India is reaching amazing levels of recognition as more and more foreign funds make an entry in India. An expected US$ 10 billion worth foreign direct investments (FDI) is envisaged for the Indian real estate sector. More than the trend of real estate rates being triggered from within, it is the pressure from Non-Resident Indians (NRIs) and global market players that is prophesizing the future of the real estate boom in India. Real Estate has come on tops in terms of interest shown by overseas Indians.
Real Estate is attracting NRI investors not necessarily for speculative purposes, but to acquire strong assets that will give good returns. The most favourable route for NRI investments is to participate in a variety of infrastructure projects like roads and bridges in urban areas, construction of residential and commercial projects, development of townships at city and regional level and investment in participatory ventures.
The Real Estate rev up
Reinforcing the importance of such investments are the glorious opportunity-laden times offered by the growing Real Estate market in India, amply supported by the liberal investment policies of the Indian government at the Centre and the States.
The lucrative segments of the Indian realty market are open to global investors. The Indian government has opened the construction and development sector for foreign direct investment. Overseas Indian Facilitation Centre (OIFC) launched by the Ministry of Overseas Indian Affairs (MOIA) has been set up to help overseas Indians invest in India.
Residential prices have soared to more than Rs 5,000 per sq feet while commercial prices are over Rs 10,000 in Tier I cities. Property in Delhi is riveting enough to keep the average investor on his toes. Real Estate is up for grabs in the domestic and international circuit due to the city's fast paced and ultra modern lifestyle.
The technology boom has led to the skyrocketing of prices. Tier I cities like Bangalore, Delhi, Mumbai have registered a phenomenal growth in the past decade with their effect cascading into the Tier II and Tier III cities like Chandigarh, Gurgaon, Pune, Hyderabad, Mysore.
The various lucrative avenues created to invite maximum investments from abroad are being thoroughly appreciated.
NRI fund infusion in JVs
Malini Alles, a Silicon Valley billionaire has launched a Real Estate $150m fund with a greenshoe option of another $100m to invest in the Indian property market. Raj Vakharia, an entrepreneur from the U.S. has announced the launch of a private equity fund that will invest $250m worth of U.S. institutional capital into India's real estate market.
NRIs in Qatar are showing keen willingness to invest here. The anticipated launch of real estate investment trusts (REITs) when operational in India would ensure their participation in investment grade buildings. Currently, Indian REITs are making a foray into the Singapore market.
Business Park developer has applied to the Monetary Authority of Singapore to raise $357m to invest in integrated real estate projects in India. Pearl Global is venturing into real estate, tying up with Ansal Properties to develop 9.26 acres of commercial land in Gurgaon.
In a joint venture with two NRIs, Kolkata based Bengal Shrachi Housing Development has announced the launch of a housing complex with fully furnished ready-to-move in apartments in Rosedale Garden, designed to Non-Resident Indians (NRIs) taste and preferences.
The joint venture has shelled out Rs 3 bn for this mega project. All this clearly throw a light on NRI interest and confidence in the real estate market of India for safe and rewarding investments.
NRIs can fund investments through their own funds by using inward remittance from overseas, income earned overseas or personal savings outside India, or funds held in non-resident external (NRE) or non-resident ordinary (NRO), or foreign currency (non-resident) (FCNR) bank account for purchasing Real Estate in India.
Financial institutions and banks are forthcoming in financing their requirements considering them a safe profile due to their good repayment capacity.
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