Indian real estate is coming out of the shadows and gaining distinction on the world stage. Foreign investments in Indian realty have significantly shot up from $3.2 billion during 2011-13 to a whopping $7.6 billion in 2015-2017, recording a staggering surge of 137 percent. Policy reforms, political stability, liberalization of the FDI policy and improvement in investment sentiment have set the stage for Indian real estate’s new chapter of growth.
First among emerging markets
According to reports, India has attracted the highest interest of global investors among all emerging markets. Economic and political stability and big bang reforms such as the Goods and Services Tax (GST) and Real Estate Regulation Act (RERA) and Real Estate Investment Trusts (REITs) have lent credence to India’s reputation as an emerging financial superpower. Among major cities, Mumbai was the hot favorite of foreign investors and took the largest piece of the pie with 39 percent of of capital flow in Indian reality. India’s IT capital Bengaluru topped the charts among other metros with 11 percent foreign investment followed by Chennai at 10 percent and Delhi at 4 percent respectively.
CRE and affordable housing attract investment
A slow-down in residential demand has not dampened the spirit of foreign investors that are focusing on profitable asset classes. Commercial real estate, affordable housing, logistics parks and warehouses have caught their fancy. In fact, the total investment in the real estate sector crossed Rs.16,000 crore in the first six months of 2017, the highest ever for the first half in any year. Major foreign investors backing India’s realty story include Canadian Pension Plan Investment Board (CPPIB), Caisse de Depot et Placement du Quebec, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC and the Blackstone Group.
Big bang reforms boost investment
Pro-investment policy decisions made by the government have had a big role to play in boosting investor confidence. With the implementation of the new Companies Act, sectoral reforms such as GST, RERA and revised accounting standards, Indian real estate is being perceived as a mature and transparent industry.
The launch of REITs in the near future is likely to bode well for Indian realty as it will attract further private equity from abroad. Experts estimate that India’s real estate market will go from strength to strength with foreign investments increasing to $10 billion by 2020.