India Real Estate Investments
Real estate, or property, is one of the one of the major asset classes people the world over invest in. Like the US, India is becoming increasingly urbanised, where more youth are moving into cities, which is one of the prime reason that investors and developers are entering into the booming Indian property market.
International investors like the US-based Warburg Pincus, Blackstone Group, Broadstreet, Morgan Stanley Real Estate Fund (MSREF), Columbia Endowment Fund, California Public Employees' Retirement System (CalPERS), Hines, Tishman Speyer, Sam Zell's Equity International, JP Morgan Partners and Amaranth Advisors have been found to show interest. A few funds belonging to Warren Buffet's Berkshire Hathway are also interested in India real estate investment.
Indian institutions like HDFC, ICICI Venture and Kotak Mahindra are launching funds to invest in real estate. HDFC, in association with SBI and ICICI Venture, has already launched a real estate fund, while ICICI Venture is also tying up with Tishman Speyer, one of the leading owner-developer-operator of upmarket properties in the world.
The US based realty major, Trump, is planning to invest in the Indian property market in the next 18 months. Mumbai and Delhi could soon witness Trump Tower on the lines of Trump Organizationís high-rise buildings in Manhattan. Donald Trump Jr, executive vice-president, development and acquisitions, Trump said that the companyís chief focus will be on high-end projects in Mumbai, Delhi, Hyderabad, Bangalore, and resorts and villas in Goa.
This sky-rocketted the real estate prices in India. A fresh example, One four-bedroom apartment in the financial capital Mumbai sold for a hefty 8.62 million dollars last week. That was the equivalent of 97,842 rupees (2,488 dollars) per square foot, the Times of India reported, calling it the country's "largest ever" price per foot. In the early 1990s, apartments in the same building were selling for 7,000 rupees per square foot.
Commercial and private rents have also soared. The price of office space has climbed by 55 percent in Mumbai in the past year, making it the second costliest office market in the world after London, according to a report by realty consultant C.B. Richard Ellis. Consequent upon economic expansion all over the world, office rent recorded a global jump last year, the percentage of increase being 12 on an average.It is to be noted that in Mumbai, the financial capital of India, the upward movement was steep enough to make it the fifth most expensive city around the globe. For example, the average rent in the city's Worli area more than doubled to $120.15 (Rs.5,287) per square foot. In the process, says a study called 'Office Space Across The World' by Cushman & Wakefield, the New York-based second largest realty brokerage at the international level. Mumbai's global ranking has gone up from No. 11 a year earlier, making it a more expensive place than Milan, New York and Dubai as far as rent for office space is concerned. Firms like Goldman Sachs Group Inc., UBS AG and Credit Suisse expanded their base in Mumbai in 2006.
Top of the list of Indian property magnates is developer K.P. Singh who made a far-sighted bet decades ago that real estate would eventually soar. In the 1970s, he bought 1,000 hectares (2,470 acres) on the far reaches of New Delhi that spawned Gurgaon, host to such corporate heavyweights as Motorola and Dell. The 76-year-old Singh now is worth 35 billion dollars and his real estate development company DLF is India's largest, raising two billion dollars in June in the country's biggest-ever IPO.
While nobody knows how long this trend goes like this, we just have to wait and watch the market.