Investing outlook
A poll taken by Sama Dubai (a Dubai real estate developer) at the MIPIM Asia expo in Hong Kong had the following interesting Asian property stats:
• The predicted potential growth prospects in India were the highest at 38 per cent due to a residential housing shortage of 60 million units & development of 4.3 million square metres of commercial property in the next 24 months. The hotspots cities identified were Chandigarh , Chennai and Kolkata .
• At second place was the GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia & UAE) with an anticipated growth rate of 34 per cent
• Coming at the third place was China with an expected real estate growth rate of 28 per cent (and a forecasted economic growth of 9.9 per cent by the World Bank)
• Other strong growth prospects were in Hong Kong, Singapore, Korea, Malaysia and Taiwan
• Asian countries currently attracting the highest foreign direct investment:
China - 35 per cent
India - 33 per cent
Japan - 12 per cent
GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia & UAE) - 12 per cent
Australia - 6 per cent
Korea - 2 per cent
Top three key factors for international real estate investment decision making:
- Market conditions
- Micro and macro economic factors and
- Rental prospects
India is currently suffering from a deficit of between 80 - 100 million housing units and the country’s government have realised that foreign direct investment into the property sector is key to solving this strategic issue and to further boosting the country’s growing economy over the longer term.
Having identified this fundamental fact, the government have issued brand new legislation to liberalise the laws of FDI with regard to the property sector in India and immediately the Indian real estate market has embraced a record amount of overseas investment which has been committed by US based investors to new housing projects in the cities of Bangalore, Mumbai, Kolkata and New Delhi.
The housing market in India is already oversubscribed - demand exceeds supply as stated - and the divide is growing by up to 34% a year. There is therefore room for substantial growth and impressive profits and returns and these facts have been identified by Nevada based Royal Indian Raj International Corporation who have teamed up with the New York based investment banking company Greenwich Group International to jointly announce a one billion US dollar initial investment into India’s property sector.
The initial project being undertaken by the conglomerate is Royal Garden Villas, a seventeen acre residential development on the outskirts of Bangalore and just 25km away from the brand new Bangalore International Airport. The first phase of villa development will be released Autumn 2005 and feature a variety of Mediterranean styled homes for freehold purchase.
The initial one billion dollar investment may well be record FDI for the real estate sector in India but it heralds merely the start of Royal Indian Raj International Corporation’s commitment. Royal Garden Marina City and Financial Harbor are the next two projects on line to be developed in Mumbai which is India’s financial capital. Over sixteen billion dollars of investment will be raised to develop the projects which will cover over five thousand acres of prime real estate in Mumbai.
Royal Garden City in New Delhi and Royal Garden City in Kolkata will follow with project start dates targeted to commence on schedule in the Summer of 2006, and in total the company have committed to the Indian real estate market for the next ten years during which time they will aim to create 10,000 new direct jobs and 40,000 new indirect jobs in India.
This overseas investment commitment is understood to have been built off the back of the overall strengthening of the Indian economy, the rise in personal wealth levels being enjoyed by many Indian citizens and the associated rise in consumer spending, together with the improvements being made in local lending facilities and of course the growing demand for housing units that cannot be met by local constructors in the short to medium term.
|