Cross-Border Investors Pushing FDI in Indian Realty

June 8, 2007	(Be the first to rate this story!)  Loading ...
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Of a total $30 billion of foreign direct investment (FDI) earmarked for Asian real estate market in 2007, $6 billion is believed to come into Indian real estate only, says a report compiled by Jones Lang LaSalle (JLL), one of the world’s leading real estate services and money management firms.

The consultancy firm has also given details about the deals taken place during January-March 2007. Taking the changing trend in FDI during the first quarter of 2007, a major part of the capital has been used in the residential sector and in mixed used projects. Since builders and property developers are not allowed to use the capital raised from banks for purchasing land parcels, capital raised through private placements, foreign investments and funds are being used for such transactions, says Abhishek Kiran Gupta, JLL strategic consulting & research division senior manager.

In recent years, Indian residential sector has emerged as the most preferred investment destination for foreign investors.  Add to that, cross border investors are also taking large interests in commercial property in India especially across metros as they have a much mature real estate market than upcoming cities.  Rentals for Grade A commercial properties in tier- II cities such as Mumbai and Delhi have shot up by more than 100 per cent in the last 1-2 years.

The year 2006 has seen major investments being made in floating the Special Purpose Vehicles (SPVs), entity-level transactions increased during the first quarter of 2007. This can be attributed to investors’ increasing confidence in the Indian real estate market.

Around 94% of FDI has made its way for property market in tier-II cities including Delhi, Mumbai, and Bangalore. This is despite the high entry barriers associated with investments in these cities.  Investments in tier-II cities in the next two-three years are likely to soar due to growing demand in these areas, adds the report.

News Published Under:   Foreign Direct Investment in India |

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