It is very much apt to say that the Indian government’s efforts in the direction of increasing transparency and regulations in the Indian Real Estate sector will have a positive impact on global investor interest. The steps taken in the past and the current decisions on pumping the black money out of the Indian market now has made it very clear that the government is trying to put the Indian real estate on par with global business standards. With the new regulatory development taking place hand in hand with the infrastructural developments, it is an outstanding effort. Now more and more foreign investors will be able to take part in the sector. India has been one of the hot markets for investors around the globe and with these laws, investors, particularly seeking for diversification in their portfolios will be increasingly attracted towards our investment opportunities.
While global investors have always been cautious in investing in the Indian Real Estate sector, critical shifts in real estate policy and better on-ground execution lay the foundation of attracting more investments into the sector. Investors have always looked for investment in countries like India, China, Europe, Brazil, etc. Cities like New York, Paris, Washington, San Francisco, etc. always have a high investment rate, but still they are considered to be ‘safe for investment’. Global investors have learnt the lesson that investing in India just with a capital will bring them no good. A lot of them have gained and even lost a lot of money in just understanding the systems and processes. The investors’ outlook has always remained strong, but they will not invest if procedures, policies, financing, approvals, etc. are not in place. Inadequate infrastructure is another reason which restricts investors.
What do global investors expect- Global investors want to see India being more open towards investing directly in real estate. It should be easier for them to enter and exit the market. A good governance is what provides comfort to overseas investors. The good news is that the introduction of RERA, 100% FDI in construction and easing of REITs regulations will spur capital inflows into the country and bring institutional credibility to its real estate. India has an advantage over similar developing countries as even they are open to a regulatory environment, but at the same time, they don't want a very massive entry of foreigners taking over their country.
Changes expected with global entrants: With more and more global players entering the Indian market, we should be expecting improved regulation, more transparency, clear ownership, ease of movement of money, certainty of leases, confidence in construction and above all a stable business environment. The future growth of real estate will now be completely dependent on the construction quality and the demand. Global investors such as Blackstone Group, Singapore's sovereign fund GIC, Goldman Sachs and Qatar Investment Authority, have already been invested in Indian realty assets for the last few years. In addition to it, there are several new investors eyeing investment and alliance opportunities in India. Thus, foreign investors' appetite for Indian real estate is on the rise. Many thanks to the government initiatives of ending the black money component of the Indian economy, investors’ can now look up to a regulated business environment.
The road ahead: Real Estate is a very big attraction when it comes to foreign investments. As a matter of fact, real estate is reaching a point of saturation in developed countries. The demand and prices are falling which makes the global real estate players and investors in search of emerging economies where they can park their money. Indian Real Estate stays attractive due to its strong economic fundamentals and demographic factors. Investors know that the Indian real estate will fetch higher returns in the coming times as compared to other global markets. On top of it, the way the government is getting pro-active and taking harsh measures, the coming years will be a golden time. The opportunities in the real estate sector will attract more global players to India and hence will help the industry to mature. There will be and improved management and delivery by opting advanced construction techniques. The image of the Indian real estate market, which is largely fragmented, unorganized and a safe heaven for black money will see an upside down change.