FDI in India’s Booming Real Estate Jumps 80 Folds

It’s not Indians alone who are monitoring the real estate market here. More and more money is being pumped into India’s housing sector from abroad. And this, despite the recent downturn. Foreign direct investment (FDI) in India’s booming real estate and housing market jumped 80 times between 2005 and 2010. Figures obtained by TOI show that in 2005, FDI in real estate was a mere Rs 171 crore. That soared to Rs 13,586 crore in 2009-10. In April and May this year, Rs 737 crore in FDI was pumped into the sector.
It is no surprise that the largest number of building projects where FDI is in play are in the country’s commercial capital, Mumbai. Of the total 1,614 projects in which foreign investors have put in money since 2005, 422 were cleared by the Reserve Bank of India’s Mumbai office, followed closely by 316 in Delhi. Other big cities like Bangalore (225 projects), Hyderabad (105 projects) and Chennai (68 projects) also enjoyed considerable attention of foreign real estate developers.

Interestingly, given the booming property market across the country, FDIs are not confined to metros and big cities alone. Thus since 2005, various real estate projects have been given a green signal by RBI’s offices in Bhopal, Kanpur, Kochi, Jaipur and Panaji, amongst other places. The largest FDI in the last five years remains in the construction of a technology park at Bandra Kurla Complex in Mumbai. In this case, $372 million has been brought in through a foreign collaborator based in Mauritius.

Although the FDI has come from as many 34 countries and destinations as diverse as the Netherlands, USA, Saudi Arabia and even Sudan, data available with TOI shows that in last five years the largest number of foreign collaborators working with Indian real estate firms were based in Mauritius. Technically speaking, the Foreign Exchange Management Act or FEMA, prohibits foreign investment in real estate and construction of farm houses. However, the definition of “real estate business does not include development of townships, construction of residential or commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure”

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Global Commercial Real Estate to Touch $300-bn Mark

Reflecting improved investor confidence, investment in commercial real estate globally is expected to witness a “healthy” growth of 40-50 per cent to $300 billion in the current year, says a report. According to the report by global real estate services firm Jones Lang LaSalle, the first half of 2010 saw investment worth $130 billion in the commercial real estate globally and is likely to touch $300 billion in the full year, representing an increase of 40-50 per cent from 2009.
“The first half of the year showed that confidence has improved and momentum has increased. While markets across the globe are strengthening, the last few weeks have shown that regional markets are moving with different dynamics,” the report noted. In the commercial real estate market, the quickest recovery was seen in the Asia Pacific. Europe lagged behind, where the investors still seem more hesitant, due to sovereign debt and austerity packages concerns, followed by the US, which had a slow start to 2010, but investment markets are picking up with the stabilised market fundamentals.

While, the rental markets are still to catch up in Asia with the improved market sentiment, the rental growth is expected to make a comeback in few European markets over the second half of 2010 and 2011.

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Where's The Bottom Real Estate Foreclosure 2010 2011 2012

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Is Delhi Real Estate leading to a Dubai-like over-supply driven by hype?

Most are thinking about where in India to actually invest in properties to have maximum returns. Though all the major Indian cities have seen an appreciation in the property prices, New Delhi, the capital of India has experienced the maximum rise in property prices. Hence, and contrary to common belief, the market shall become more unpredictable and dangerous for individual home owners or investors.

Property prices in and around New Delhi have increased many times within last few years. It's not that the property prices in New Delhi have suddenly seen a rise. Prices of property whether it be residential, commercial or industrial have been rising in New Delhi over the last few years.

And the reason behind this steady rise in property prices is the fact that being the capital of world's largest democracy, Delhi has always attracted people from all walks of life. And with Delhi being the host of Commonwealth Games to be held in 2010, considerable investments are being made by the public sector to improve the overall infrastructure. You may always wonder what will happen after this CWG 2010 hype is over and Delhi is left with real estate over-supply!

The government's positive attitude, transparent property laws and the great demand for housing and commercial establishments are attracting more people for making property investment than any other city in the region. This leaves other cities high & dry and makes Delhi congested and populated. The returns on the investment on the capital value of the property are among the highest in the world. And with the industry expanding rapidly, many are lured to not miss the opportunity and jumping-in?

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UniTech Ends Join Venture With Mumbai-based Omkar Realtors Developers

Unitech Ltd, India’s No. 2 realtor by market capitalisation, is completely exiting Unitech Omkar, its joint venture with Mumbai-based Omkar Realtors Developers, DNA has reported, citing sources close to the development.
Though the venture had fallen apart in May, the partners were believed to have decided to continue the projects launched by the company as individual special purpose vehicles (SPVs).

Now, sources said, Omkar will pay off Unitech the Rs 250 crore or so it had brought to the JV and some more, and undertake development of the project on its own, the report said. The 50:50 JV had planned to undertake development of 10 million sq ft in the next three years.
In May, while separating, the two partners had decided to complete the 1 million sq ft of launched projects together as SPVs.

When contacted, Omkar Realtors said the SPV arrangement would continue. “Even though the JV ceases to exist at an entity level, the working arrangement between the two companies is being redefined to an SPV arrangement for which the modalities are being worked upon… all project’s will be executed as per the defined timelines. Debt payment may be a default outcome once the modalities have been worked out,” a spokesperson said.

On paying Unitech Rs 250 crore, the Omkar spokesperson said the modalities were being worked out. Unitech has another JV called Shivalik Ventures with Haresh Mehta promoted Rohan Developers, which is developing the Golibar commercial project.
Together with Omkar, the two JVs accounted for Rs 10-12 of Unitech’s share price.
Unitech has a portfolio of 42 million sq ft in Mumbai, of which its share is 50 per cent, or 21 million sq ft.

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