Nov 22, 2007

Real Estate Boom


Global real estate majors such as Dubai World, Trump Organisation of US, Smart City of Dubai, Kishimoto Gordon Dalaya, Khuyool Investments, Bonyan Holding, Plus Properties, ABG Group and Al Fara’s Properties are descending on the Indian real estate market with an investment of around $20-25 billion in the next 12-18 months. Top-level management teams of around 50 global developers are currently in India scouting for joint venture partners and tie-ups with various state governments to enter one of the booming property market in the world.

Officials close to the developments said that over 200 meetings were held between the representatives of foreign real estate firms and Indian companies and over a dozen JVs are in the final stages. DAMC Holding (a Dubai-based leading real estate firm ) chairman and founder Hussain Sajwani said they have firmed up plans to invest around $3-5 billion in the Indian market. “We are in negotiations with various Indian developers for a possible joint venture, and hope to enter the market in the next 12 months,” he said.

Trump Organisation executive vice president (development and acquisition) Donald Trump Jr is euphoric about India. “Now is the time to come to India. We hope to strike the deal in the next 12-18 months, though we will be eager to do it much before,” he said. He, however, declined to divulge the amount of investment. Industry officials said a global real estate exhibition organised by Cityscape, currently going on in Mumbai, provided a platform for their discussions.

The Indian real estate industry is estimated to grow by 33% to $50 billion by 2010 and India is looking to remain an appealing investment option for both domestic and foreign investors. Gulf Finance House (GFH) has decided to invest over $2 billion in a greenfield site close to Navi Mumbai, near to the commercial capital’s airport. GFH has already raised $630 million towards the initial development and infrastructure requirements of the project. GFH has signed a wide ranging MoU with the government of Maharashtra towards the development of Energy City India, and the project details are now at an advanced stage.

Similarly, the Dubai Internet City has picked up Kochi to set up a Smart City project, and IT and media hub. The initial investment for the Smart City, being executed by the DIC management will be over $400 million. The Smart City would come up in a vast, 1,000 acres of land on the outskirts of Kochi. Plus Properties CEO Georges Chehwane said currently India offers huge business opportunities and the firm will be entering India in a year’s time.

According to the Asian Development Bank, some 10 million housing units alone will be required by 2030 and with current central bank restrictions on domestic real estate lending, inward flows of overseas capital will be essential to fill the financing void. It is estimated that an additional 16.8 million people annually adding to the surging demand for infrastructure, housing, schools, hospitals, retail as well as hospitality and commercial property. According to property consultants, with many property markets around the world already on the cusp of recession, India offers ideal investment opportunities.