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Relaxed foreign investment rules will help Indian realtors

3 Comments   |   November 11, 2014    11:20pm   |Contributed by Indian Realty News

The relaxation of rules on foreign direct investments into India’s property development sector, will improve developers’ liquidity and speed-up project-turnaround times, but may also increase competition, says Fitch Ratings.

Fitch Ratings says that, the relaxation of rules on foreign direct investments into India’s property development sector, will improve developers’ liquidity and speed-up project-turnaround times, but may also increase competition, says Fitch Ratings. The Government of India approved the amendment of existing rules on 29 October. Key amendments include allowing foreign developers to invest in smaller property development projects – with a minimum floor area of 20,000 square meters (sqm), compared to 50,000 sqm previously . The minimum foreign-investment threshold was also lowered to USD5m per project, from USD10m.

These moves may encourage more foreign developers to tie-up with their domestic counterparts, which will improve domestic developers’ liquidity and speed up project turnaround times. India’s property projects typically have long gestation periods compared to peers in a number of other Asian markets, resulting in higher leverage and weaker liquidity for most developers. Indian developers’ average working capital cycles can be as long as five to six years, and with leverage (defined by Fitch as net debt / adjusted inventory) as high as 100%. Comparatively, most Chinese property companies have average working capital cycles of less than two years, with leverage typically well below 50%. Indian developers’ limited access to capital compared to Chinese peers, and India’s slower approval processes for the purchase and development of land parcels are mostly to blame.

On the flip side, the relaxed rules will also mean a higher supply of property projects and more price-competition among domestic developers, which will pressure profit margins. Thinner margins will reduce the cushion available to developers to cut prices and spur demand during economic downturns. That being said, larger Indian property developers have reported EBITDA margins between 25%-40% on average, and have more headroom for margin compression than, Chinese developers, most of whom have EBITDA margins below 30%. Aside from the level of competition, developers’ profit margins depend on the market segments they cater to, the point in the economic cycle, and the average age of their ongoing development projects. In a more competitive environment, factors such as a developer’s track record of executing high-quality projects as well as on-time deliveries will become more important differentiators for consumers, and will help to increase developers’ market share and prop-up their long-term profitability.

Source: Money Control

News Published Under:   Real Estate India | 3 Comments »

3 Responses to “Relaxed foreign investment rules will help Indian realtors”

Monika Vats Says:  |  November 26th, 2014 at 5:13 pm  

India is the best investment option in the world. While it would make perfect sense to have a home in the country you grew up in and also profit from the fact that property prices usually appreciate over time, where in my view Noida is best city to invest these days, even I have booked a property in sector 119, Noida. which is The Aranya.

Nisha Says:  |  February 4th, 2015 at 4:36 pm  

Mahagun as a trusted builder enjoys a high reputation in the real estate market.
What does it takes to be trusted and respected? And the answer is delivering your commitment. This is what Mahagun India has done to receive the respect and trust of the customers it holds today. Working towards land development since forty years the Mahagun India Group has always delivered what it promises. It has developed this reputation working honestly year by it. Mahagun has completed all its projects both residential and commercial with greatly planned efficiency and execution. It has always provided timely possessions without any compromise in the quality of the constructions.
The group holds many completed and successful projects to its name, Mahagun Villa, Mahagun Metro Mall, Mahagun Manor and Mahagun Mansion being some of them. Through its townships Mahagun India provides substantial and wholesome living solutions. It has always tried to bring all the modern luxuries and comforts within the budget of the mid-segment buyers. It prices its townships very reasonably and has even offered subvention scheme projects. Its projects always house great quality and durability. They come with all the required certifications and approvals and do not have any ambiguities related to payment plans or approvals. The professionals at Mahagun India are very well experienced and qualified which has greatly helped the group to develop such outstanding townships replete with all luxuries and comforts, that too at budget friendly prices.
The townships are modern, high-end and always provide timely possessions. The management of the Mahagun fraternity is very dedicated about its work and is involved in all the processes of the township from planning to execution. It is working towards continuous growth to achieve success with excellence. Be it for investment or housing purposes, Mahagun India is the most trusted name in the NCR for its timely delivery of the projects.

Sharad Jain Says:  |  February 17th, 2015 at 3:32 pm  

Buy or invest in properties in Greater Noida.

Real estate investment has always attracted investors of all segments. The region of NCR is one of the most preferred and favored real estate investment region. The main reason for this preference is its close proximity to the national capital of Delhi. NCR stands as one of the most rapidly flourishing metropolitan regions. The regions of Noida, Greater Noida, Noida Extension, Faridabad and Gurgaon are included in the regions of NCR. These regions are also very easily accessible via rail, road and metro. These areas have many ongoing and upcoming properties both commercial as well as residential options.

The commercial and residential projects in Greater Noida come with premium prices. All of these projects are being developed by some of the most prestigious and trusted land developers. These residential townships hold valid certification from the Indian Green Building Council (IGBC) which means that the complex is based on green concepts and adheres to the guidelines of the IGBC. To buy 2 or 3 BHK apartment in Greater Noida there are many options to choose as many reputed builders are offering many housing formats including luxurious apartments as well as Villaments, studio apartments and penthouses. These 2 and 3 BHK apartments in Greater Noida are a feasible buying option besides being alluring with premium specifications and deluxe designs. The apartments are full of all the luxuries and comforts and also offer contemporary structures and exotic interiors and designer layouts.
The residential projects in Greater Noida are the best properties to buy as well as invest.

The gated residential complexes offering 2 BHK apartments in Greater Noida, offer great luxuries as well as security. These reputed townships have gated complexes and offer electronic surveillance through CCTV cameras, video door phones and intercom facilities along with round the clock manual surveillance. Such provisions ensure the security of the residents and provide them peace of mind and sense of safety. These are also high on offering all the modern recreational activities that include swimming pool, gymnasium, clubhouse and much more.