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Real Estate

December, 2010

The real estate sector in India is of great importance. According to the report of the Technical Group on Estimation of Housing Shortage, an estimated shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12) provides a big investment opportunity.

According to a report ‘Emerging trends in Real Estate in Asia Pacific 2011', released by PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI), India is the most viable investment destination in real estate. The report, which provides an outlook on Asia-Pacific real estate investment and development trends, points out that India, in particular Mumbai and Delhi, are good real estate investment options for 2011. Residential properties maintain their growth momentum and hence are viewed as more promising than other sectors. ULI is a global non-profit education and research institute.

Further, real estate companies are coming up with various residential and commercial projects to fulfill the demand for residential and office properties in Tier-II and Tier-III cities. For instance, Ansal Properties has several residential projects in cities such as Jodhpur, Ajmer, Jaipur, Panipat, Kundli and Agra. Omaxe has also planned around 40 residential and integrated township projects in Tier-II and Tier-III cities, majority of them being in Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan and Haryana. The growth in real estate in Tier-II and Tier-III cities is mainly due to increase in demand for organized realty and availability of land at affordable prices in these cities.

According to the data released by the Department of Industrial Policy and Promotion (DIPP), housing and real estate sector including cineplex, multiplex, integrated townships and commercial complexes etc, attracted a cumulative foreign direct investment (FDI) worth US$ 9,072 million from April 2000 to October 2010 wherein the sector witnessed FDI amounting US$ 716 million during April-October 2010.

New Projects

Private equity fund IL&FS Investment Managers (IIML) is estimated to have invested US$ 300 million in real estate and urban infrastructure projects in 2010.

Godrej Group's real estate company, Godrej Properties and Frontier Home Developers, has launched a residential project in Gurgaon with joint venture partner M/s. Frontier Home Developers Pvt. Ltd. This is a debut residential project in the national capital region (NCR) for Godrej Properties.

Shristi Infrastructure Development Corporation will invest US$ 444.7 million over the next three years in seven small cities in West Bengal, Tripura and Rajasthan. The money would be used to build integrated townships, healthcare facilities, hospitality and sports facilities, retail malls, logistics hubs and commercial and residential complexes.

Realty major Ansal Properties & Infrastructure Ltd plans to invest about US$ 330.8 million over the next three years on expansion of its existing integrated townships and to develop a group housing project in Haryana.

Tata Housing is planning to launch about 10 new residential projects in both affordable and luxury segments in 2010-11, with an investment of about US$ 268.9 million along with its partners.

Vision India Real Estate, a closely-held business group in the US, is investing US$ 5 million in Gem Group's upcoming residential project in Chennai. This will be the first joint development project for the US company that is proposing to invest US$ 100 to US$ 200 million over the next three years on projects, especially in the logistics arena.

Ramky Estates and Farms Limited, the real estate arm of the Ramky Group, is contemplating to enter Indian market by July 2011. The company is evaluating on land acquisitions in Kolkata and Bhubaneswar.

Chennai-based VGN Developers Pvt Ltd has entered into a joint venture with private equity firm Pragnya Fund to initiate a new residential project with an investment of US$ 20.06 million in the city.

Realty major Embassy Property Developments has entered into a joint venture with MK Land Holding, a Malaysian company that specializes in pre-fabricated affordable housing, to build projects in the affordable housing segment. The proposed project entails an investment of over US$ 1.2 billion.

Thai real estate developer Pruksa Global plans to invest US$ 218 million in projects in India and launched its first residential project in the country at Bangalore in October 2010.

The International Finance Corporation is in talks with several real estate developers to create large affordable housing projects in India. For FY-09 and FY-10 (fiscal year ending June 30), IFC's highest exposure has been in India. Out of the US$ 3.5 billion that IFC has committed in India, US$ 2.5-2.6 billion have been disbursed. IFC will continue to invest roughly US$ 1 billion in India every year for the next two or three years.