Real Estate Services India

Real Estate Services India

India's real estate market is​ getting very, very warm.

It still may be a​ fragmented industry with high transaction costs and​ an​ absence of​ transparency, but it​ is​ whetting the​ appetites of​ domestic and​ overseas investors. in​ India, changing government policies and​ a​ focus on infrastructure are driving up the​ demand for​ housing developments, malls and​ offices.

"For investors seeking the​ high returns that are no longer possible in​ the​ mature European and​ North American real estate markets, India and​ China are hot," said Prakash Gurbaxani, the​ chief executive of​ TSI Ventures in​ Bangalore, a​ joint venture of​ Tishman Speyer Properties of​ New York and​ ICICI Bank, based in​ Mumbai.

"Every foreign investor group, including pension funds, high-net-worth individuals and​ private equity funds, are all looking at​ this sector," said Gurbaxani, whose company has planned to​ invest more than $1 billion in​ the​ industry in​ the​ next few years.

In the​ past, investors were wary of​ the​ opaque business practices in​ Indian real estate. the​ land laws were archaic, mortgage financing was expensive and​ the​ quality of​ the​ developments was poor.

But these days, India's $12 billion real estate market is​ expanding at​ a​ 30 percent annual rate. Analysts at​ Merrill Lynch predict that the​ real estate market will grow to​ $90 billion in​ 10 years.

Foreign and​ domestic investors are eagerly scouring this market, but only recently has real estate begun attracting meaningful amounts of​ capital, said Rajesh Khanna, managing director in​ India of​ the​ private equity firm Warburg Pincus. in​ the​ past year, Warburg Pincus has dedicated a​ third of​ its resources in​ India toward creating and​ evaluating real estate investment opportunities.

Next month, the​ real estate developer DLF Universal will have a​ public offering that is​ expected to​ raise more than $3 billion in​ what is​ billed as​ India's biggest share sale. it​ tops earlier public offerings such as​ the​ $2.3 billion share sale of​ the​ government's Oil and​ Natural Gas Corp. two years ago.

Kushal Pal Singh, the​ chairman of​ DLF and​ one of​ India's richest men, is​ credited with turning a​ sleepy New Delhi suburb into a​ bustling zone of​ fancy malls and​ offices. DLF has projects in​ 18 cities but plans to​ expand to​ 36.

Last year India's government eased restrictions on foreign ownership of​ real estate, construction and​ housing companies. Foreign developers can have wholly owned subsidiaries in​ India if​ they invest $10 million. Foreign companies can build commercial and​ residential buildings if​ the​ projects exceed 50,000 square meters, or​ about 538,000 square feet.

Last month, the​ California Public Employees Retirement System invested $100 million in​ a​ real estate fund floated by IL&FS Investment Managers of​ India. in​ March, Morgan Stanley's real estate investment arm said it​ would pay $68 million for​ a​ minority stake in​ an​ Indian property firm, Mantri Developers.

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