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UAE investors seek exposure in India real estate

Comments Off on UAE investors seek exposure in India real estate   |  May 8, 2014

Dubai: Investors from the UAE are increasingly looking to put their money in India’s real estate in view of the country’s positive environment and long-term growth potential, a financial services company told Gulf News.

ASK Group, which earlier launched funds that are focused on residential real estate in India, has received encouraging response and is bullish to attract a large interest from investors, especially high networth clients, in the UAE.

The company focuses on institutional investments, such as fund of funds, sovereign funds, endowment funds and family offices, which are advisory firms that serve affluent households. It currently seeks to raise $200 million (Dh735 million) offshore fund to be able to invest in housing developments in India.

“Family offices currently are more proactive in participating in India growth story and we hope the process of institutional investors has begun. [We’ve] got encouraging response from family offices and could able to close more than 50 per cent of the fund from UAE currently,” said Sunil Rohokale, managing director and CEO of ASK Group.

Rohokale said both non-resident Indians and citizens in the UAE, including institutions and ultra high-net worth residents, are looking for diversification and are actively seeking India’s real estate as a “de-risking strategy”.

He said the introduction of real estate investment trusts (REITs) in India and regulations such as the Land Acquisition Bill and Real Estate Regulatory Bill, coupled with a stable currency and “healthy macro-financial numbers”, have helped renewed investor confidence.

“Of late, we have seen many [Indian] developers coming to Dubai, setting up their offices and doing road shows to which investors have reacted positively because of currency gains. The property prices in India have bottomed out and in the past, many investors have made money in Indian real estate and hence are more comfortable,” Rohokale added.

ASK Group is a diversified financial services company that has been operating in India for over 30 years. Its asset management business covers equity, private equity and real estate private equity. The company considers UAE as a “very strategic market”.

Investors from the UAE are not just focused on real estate funds. Private wealth is spread across a wide range of vehicles, including mutual funds, traditional savings and long-term investment plans, among others.

A new survey commissioned by Standard Life suggested that investment flows from the UAE are likely to increase, with two thirds of NRIs saying they are optimistic that India will be more investor-friendly after the general elections.

Source: GulfNews.com



NRIs invest over $2 billion in Indian realty in 2013 on weak rupee

Comments Off on NRIs invest over $2 billion in Indian realty in 2013 on weak rupee   |  May 4, 2014

NEW DELHI: Non-resident Indians invested over $2 billion in Indian real estate in 2013, riding on the back of a weak rupee and heightened promotions by developers to attract them at a time when domestic demand was weak. NRIs spent at least 35 per cent more on buying homes across the country in 2013 compared with the previous year and made for almost 12per cent of total apartment sales in the top seven cities, according to property advisory firm JLL.

This $2 billion investment does not include Punjab, Gujarat and Kerala, states where a bulk of repatriation happens. According to the World Bank, India led remittance flows globally, receiving $70 billion in 2013.

In the year gone by, everything seemed to have fallen in place for Indians living abroad and wanting to buy property in their homeland. The rupee was on a downward spiral, dropping between 15per cent and 25per cent during the year, property developers were under tremendous stress because sales were lacklustre, property prices had not moved up too much over the last 15 months and western markets were experiencing a bounce back.

“These NRIs saw the rebound in the Dubai property market after almost two years of lull. Their reading was that if a stable government comes in after elections, a similar rebound would be in order in India as well,” said Jaxay Shah, vicepresident of industry body Confederation of Real Estate Developers’ Associations of India (Credai) and managing director of Ahmedabadbased Savvy Infrastructure. A large population of NRIs across the globe is from Gujarat. For an NRI, Indian property was at least 30per cent cheaper last year because of a combination of low prices and appreciating dollar against the rupee. Shah said it wasn’t just non-resident Gujaratis who invested in the state last year (like it has been traditionally).

He also saw many Indians settled in South East Asia and West Asia ,too, who are from different parts of India investing in Gujarat. In Kerala, another state, which has a huge NRI base, almost 65per cent of home sales in 2013 were to NRIs, up from about 55per cent in 2012, said Abdul Aziz, managing director of Skyline Builders. “NRIs pushed in a lot of money into property last year as prices were low.” These NRIs mostly bought highend properties in India, said Ashutosh Limaye, head of research at JLL. “But there were some savvy ones who also bet on emerging destinations,” he said.

For Bangalore-based Nitesh Estates, sales to NRIs made for about 20per cent of its luxury segment sales (of apartments in the Rs 5-20 crore price range). “Marketing spends for promotions to NRIs across markets have gone up significantly for us,” said Nitesh Shetty, managing director of the company. Several developers spent heavily on road shows in markets such as Dubai, the US, the UK, Singapore, countries where there are large Indian diaspora.

For Gurgaon-based builder Raheja Developers, at the time when the rupee was at its lowest in the middle of last year, almost about 50 per cent of the company’s sales came from NRIs. Home sales in India dipped considerably over the last 12-18 months because of the messy situation of the economy and a deteriorating job scene in most urban centres.

Source: ET – By Ravi Teja Sharma



Climbing up the property ladder: India largest foreign investor in Dubai real estate

Comments Off on Climbing up the property ladder: India largest foreign investor in Dubai real estate   |  April 14, 2014

International Property Show (IPS) will have a large Indian participation under the umbrella of the National Real Estate Development Council (NAREDCO), a leading real estate body in India. India tops the number of foreign investors and investment transactions in Dubai’s real estate market according to the real estate show that takes place in Dubai from 8 – 10 April 2014 at the Dubai International Convention and Exhibition Centre.

Dubai Land Department (DLD) said earlier that more than 8,092 investors from India notched AED 17,939 billion transactions in Dubai real estate during 2013, surpassing all foreigner investors in the Emirate’s property sector.

NAREDCO has announced that the Indian pavilion that will include properties from across India from developers in Mumbai, Delhi, Bangalore, Goa, Noida and Gurgaon. Some of the participating developers are Raheja Developers, Nahar Group, Mantri Realty, Godrej Properties, Heritage Group, Kalpataru, Patel Realty, Artha Properties, Landmark Group, Paramount Buildwell, Sunteck, Kanakia Spaces, HDFC Home Loans and others.

“Indian investors are very active in Dubai property sector. Investing nearly AED 18 billion in Dubai reflects the huge interest from Indian investors in the Dubai market and their confidence in the lucrative returns,” said HE Sultan Butti Bin Mejren, Director General of the Dubai Land Department, “It is obvious that the Gulf region has presented itself as a key investments player in the world. The well developed infrastructure and strategic location of Dubai will drive this sector to greater success.”

Dawood Al Shezawi, CEO, Strategic Marketing & Exhibitions, organizers of IPS said, “A visit to the NAREDCO India Realty Pavilion will offer Indian expatriates living in the UAE and the Gulf a unique opportunity to select a place back home at a time the real estate is becoming one of the most lucrative investment options for NRIs.”

Shri. Sunil Mantri, President NAREDCO added, “For Indians in the Gulf, investing in India is a sentimental decision. As it is driven by a need to remain connected to their roots. The ‘NAREDCO Indian Pavilion’ would give you an opportunity of owning your own place back in India.  With definitive pick up in the economy, as the GDP has improved, inflation has moderated, growth in industrial production is seen with other positive triggers, that has driven the stock markets to the current levels, investment in properties in India would be an lucrative Investment option.”

“The India Realty Pavilion at IPS will serve as unique platform for Gulf Indians, HNI’s, investors, consultants and home buyers to check out exclusive deals offered by participating developers,” Al Shezawi added.

Source: DNA, India

 



NRIs, look before you invest

Comments Off on NRIs, look before you invest   |  October 11, 2013

The global capital and currency markets have been volatile for last the few months, also triggering serious turbulence in the rupee. The current account deficit and the fact that foreign institutional investors are selling heavily on the Indian bond market have been the key triggers for the rupee’s repeated depreciation. Factors such as negative export and industrial growth have triggered even more uncertainty, specifically in the currency trend pattern.

The key question is will the rupee see a further depreciation? Parliament has passed the Food Security Bill, which effectively increases subsidy burden for the government.

The fact that the Lok Sabha elections will be held in in 2014 may be cause for more of such populist measures — nevertheless, the country’s overall financial status does not look very exciting right now. We may continue to see volatility over the mid-term.

NRIs and the real estate market

When it comes to Indian real estate, the non-resident Indians (NRIs) take centre-stage when the rupee depreciates. The foreign exchange that they tend to funnel into the sector increases significantly when the rupee slides. In times of rupee volatility, banks institutions and developers tend to announce various schemes aimed at attracting NRIs.

At the same time, they are also attracted to the higher interest rates on NRE (Non-Resident External) and FCNR (Foreign Currency Non-Resident) deposits, as the standalone rupee returns look quite lucrative to them.

Paradoxically, data covering the last two decades indicates that NRIs have, in fact, been losing out when they funnelled their foreign exchange into such accounts during such volatile times. They have erroneously assumed that they are capitalising the rupee’s volatility by locking into high yielding deposits. However, this route has caused them to miss out on overall capital returns, because the perceived benefits of high interest rates are actually eroded by the depreciating rupee.

It is therefore wrong for NRIs to assume that they can earn good returns by locking their foreign exchange into high-yielding deposits. The reason why more and more NRIs are choosing to invest in Indian real estate instead is because they are now aware that this is the only route that assures them of optimal benefits.

As long as they maintain a broad investment horizon and have chosen their properties well, the capital appreciation on real estate translates into multi-fold that put all other asset classes in the shade.

Traps on the path

NRIs have always been soft targets for hyped-up real estate marketing by developers. The objective of such marketing is to make them believe that the projects being offered have been specially created for them — that are not standard offerings on the market. Projects being marketed directly to NRIs are trumped up as the best options that money can buy in India.

The fact is that most of these projects are not professionally managed, which has extremely negative implications for someone who is not physically present in India. Lack of proper project and facilities management results in accelerated dilapidation of neglected units, and security also becomes an issue. There are often no provisions for paying society dues from abroad.

Likewise, NRIs who have made a sentiment-driven property purchase in their home towns in India, often overlook that paying dues such as property tax online may not be an option in these locations. The end result is that the property turns out to be a depreciating and legally compromised money trap.

For these and many other reasons, NRIs should not give in to sentiments or manipulative marketing while making a decision on buying property in India. Such decisions need to be based on sound advice from professionals, with the objective of reaping good returns on investment.

For NRIs, the Indian real estate market definitely holds the highest possible investment potential. However, no such investment should be done on impulse, and it is at all times advisable to maintain a healthy long-term investment horizon of between 7-10 years.

http://www.indianexpress.com/news/nris-look-before-you-invest/1175404/0



Canara Bank launches two new housing schemes for NRIs, HNIs

Comments Off on Canara Bank launches two new housing schemes for NRIs, HNIs   |  October 4, 2013

NEW DELHI: State-owned Canara Bank today launched two new housing schemes for Non-Resident Indians (NRIs) and High Networth Individuals (HNIs), in a bid to cash in on the festive fervour.

The demand from NRIs for houses has increased considerably and enquiries with regard to housing loans from NRIs with builders have grown by 20 per cent at present, Canara Bank Chairman and Managing Director R K Dubey said here.

Home loan of up to Rs 30 lakh would be available to an NRI at the base rate of 9.95 per cent, while loans in the bracket of Rs 30-75 lakh will be available at a rate of 10 per cent. Loans of above Rs 75 lakh would attract Rs 10.20 per cent.

Further, the demand from HNIs for housing loans of above Rs 1 crore has also increased, Dubey said, adding, the premium housing loan scheme is exclusively for HNIs having gross annual income of Rs 25 lakh and above.

The minimum loan amount under the scheme is Rs 1 crore and the rate of interest charged would be 10.05 per cent.

Processing charges for both the schemes have been waived till October 31, he added.

http://economictimes.indiatimes.com/markets/real-estate/news/canara-bank-launches-two-new-housing-schemes-for-nris-hnis/articleshow/22946361.cms



NRIs keen to invest in real estate in India, says developer

Comments Off on NRIs keen to invest in real estate in India, says developer   |  October 2, 2013

LONDON: As a sequel to recent depreciation in the rupee, Non-Resident Indians from around the globe have evinced interest to invest in real estate in India, a Mumbai-based real estate developer has said.

“With the dollar appreciating against the rupee, there is a lot of interest among rich NRIs in the UK and elsewhere to invest in India,” Gaurav Gupta, Director of Mumbai-based Omkar Realtors & Developers told reporters here.

Gupta who was speaking after unveiling their ambitious 800 million (Rs 8,000 Crore) Sky Villas project – Omkar 1973 Worli – said, “NRIs want to have a house in India and they see a great investment opportunity now. We have received positive response from NRIs not only from the UK but also from Hong Kong, Singapore, Dubai and the US.”

Omkar 1973 Worli, encompassing 3 towers scaling beyond a combined height of 800 metres, is a flagship development of the group spread over 4.5 acres.

The name Omkar 1973 derives from the latitude and longitudinal coordinates of Mumbai city and is designed by world’s leading architecture design firm Fosters plus Partners.

Gupta said in all 400 plus ‘Ultra-Luxury Apartments’ would be built under the free sale portion and 40 per cent of the apartments have already been booked. The minimum cost of a flat would be Rs 18 crore (4,000 sq.ft) and maximum would be about Rs 80-90 crore (18,200 sq ft), he said.

On completion of the project by mid-2017, it will be one of the best projects in the world, he claimed. “This will change the standard of real estate in India.”

Elaborating on their debut in India’s residential space through the partnership with Omkar Realtors, Nigel Dancey, Senior Partner, Fosters Plus Partners said: “We have tried to give a holistic approach to the design that can be witnessed in the details of the lobby and in the individual villas. This project has a unique indoor-outdoor living design, giving home owners an opportunity to fully enjoy every space.”

The project is located very close to Bandra-Worli sea link; with Mumbai s landmark Siddhivinayak shrine also located nearby.

The project attracted an initial Rs.200 crore funding from the Ajay Piramal Group and Rs.1,200 crore debt funding from Yes Bank, Gupta said.

http://economictimes.indiatimes.com/markets/real-estate/news/nris-keen-to-invest-in-real-estate-in-india-says-developer/articleshow/22889327.cms



Rupee free fall wipes out meager returns on real estate; makes PE exit painful

Comments Off on Rupee free fall wipes out meager returns on real estate; makes PE exit painful   |  September 23, 2013

MUMBAI/BANGALORE: The depreciating rupee may have helped improve property sales to NRI buyers, but it isn’t helping the saviour of real estate developers — private equity firms — which are not only stuck with their earlier investments, but can’t raise fresh funds either.

Indian currency’s record depreciation against the greenback and weak property market have restricted realty private equity offshore funds’ fresh fund raising efforts as well as trapped their earlier investments since FDI gates were opened in 2005. The rupee has depreciated nearly 27 per cent since April 1 to touch a record low of Rs 68.63 against the dollar on August 28. Over the past two years, when most of these exits were being planned, the currency has slipped 46 per cent to touch this level.

It has almost wiped out foreign private equity funds’ meager returns from real estate, and any exit now will lead to at least 25-30 per cent loss in dollar terms. “The environment for raising fund from overseas investors is not very conducive. Offshore funds that have invested during the last few years when the US dollar was quoting at Rs 42-52 will find it challenging to offer good returns now because of the fall of the rupee and weak underlying market,” says S Srinivasan, CEO at Kotak Realty Fund.

Investments made in Indian real estate sector are cumulatively estimated to be around $15 billion since foreign direct investments were allowed in the sector. Around 20 per cent of this was expected to get an exit in the past two years, but seems a distinct possibility now. Private equity firms with offshore funds are in a state of flux not only because of their stuck investments and delay in project completions, but are also concerned about not being able to raise fresh funds in the current scenario.

“Most capital in Indian real estate was invested at the exchange rate of around Rs 40 to a dollar with the expectation of 25 per cent returns. The current phase of currency depreciation would impact the real estate sector adversely as foreign investors would wait for the full cycle to play out and exchange rate to settle down before taking any fresh investment calls,” says Rajeev Bairathi, executive director, capital transaction group and north India, Knight Frank India.

Most real estate funds that have invested at dollar rate of around Rs 40-45 are likely to get an exit after these seven years at more than Rs 60, which is a loss of around 30 per cent in the currency itself. Moreover, most assets, given the weak property market, have not seen any major appreciation.

“Although rupee has depreciated a lot since these funds invested in projects and is showing no signs of returning to 2006-07 levels. As funds are coming to an expiry and savvy investors are likely to press for exit even at a loss as they are aware that most currencies globally are also following a similar trend,” says Ramesh Jogani, Managing Partner of private equity realty firm Indian Property Advisors. According to him, several funds that have already tried to exit their investments in the past two years and have had little success, may not be able to hold on to their assets for long in anticipation of the dollar-rupee parity reverting to its Rs 45 level.

Private equity investment in Indian real estate nose-dived in the first half of 2013. For the first six months this year, real estate private equity investments were recorded at $276 million (Rs 1,638 crore), 46 per cent lower than a year ago. Private equity funds invested $514 million (Rs 3,050 crore) in the first half of 2012, says a recent report of Cushman & Wakefield, an international property consulting firm.

Bhairathi of Knight Frank does not expect significant foreign capital to flow into the country until the macro environment stabilizes. “This in our view would take at least another two to three quarters and the next general election might offer major triggers for the capital flow to resume. Till such time, it would be extremely difficult to raise fresh offshore funds. Further, the disbursement of capital on the already announced deals might be put on hold till stability returns,” Bhairathi says.

While many experts are concerned about the probable exits at losses and their impact on further fund raising activity, there are some who differ. “In rupee terms, returns are still good. A fund or fund manager cannot be held responsible for currency risk and most seasoned investors usually hedge their position on their own. As an after effect, the sharp depreciation in rupee is likely to result in increasing these hedging costs incurred by investors at their end,” says Shobhit Agarwal, MD, capital markets, Jones Lang LaSalle. Agarwal accepts that the rupee depreciation will impact the fund raising efforts as investors’ investment allocations will change hereon. But, he is also hopeful that it will not stop the capital flow completely.

Private equity deals, given their structure and longer tenure, are not covered through any hedges and this leaves room for sharp impact of currency risk on exits. “In the past five years, currency has depreciated by 3-4 per cent compounded annually depending on tenure of the fund. There will be cases where funds will put exits on hold and wait for rupee to appreciate for better returns,” says Amit Bhagat, CEO and MD, ASK Property Investment Advisors. The 2013 fall is not a sustainable phenomenon and is a matter of concern, but it is not a long term event, he says.

http://economictimes.indiatimes.com/markets/real-estate/realty-trends/rupee-free-fall-wipes-out-meager-returns-on-real-estate-makes-pe-exit-painful/articleshow/22501425.cms



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