When the Indian government in a tie-up with the Confederation of Indian Industry (CII) launched the Overseas Indian Facilitation Centre (OIFC) a little while back, it had probably not bargained for the nature of the response it got.
If OIFC Chief Executive Harish Kirpal of the CII is to be believed, overseas Indians are flooding the OIFC�s mailboxes with investment related queries and not complaints or distress calls.
Well, one could argue that the primary objective of the centre was to lead Indian diaspora up the investment avenue, but one would certainly not have expected real estate to be the area of greatest interest. At least, not one in which NRIs would want OIFC help. But that�s exactly what�s happened.
�We are getting a lot of queries from overseas Indians about investing in property in India,� Kirpal was quoted by The Times of India as having said recently.
OIFC, a one-stop shop to help overseas Indians invest in India, was launched by the Ministry of Overseas Indian Affairs (MOIA) on May 28. The CII is the private sector partner and host institution of this not-for-profit trust.
Speaking about the response received by the centre since it was launched, Kirpal said going by the initial trend, real estate tops the list in terms of interest shown by overseas Indians while stock market investments come second.
With the surging demand for investment in real estate from domestic and overseas investors, real estate investment trusts when operational in India would enable a larger number of players to participate in investment grade buildings. These are currently worth $ 83 bn in India.
Currently, Indian REITs are entering the Singapore market. Ascendas India, the Business Park developer has already applied to the Monetary Authority of Singapore to raise $357m to invest in integrated real estate projects in India.
DLF and Unitech are also deliberating on this option. While Unitech is going in for an overseas listing, DLF Assets has kept its options open for an Indian listing if the trusts are allowed to operate in the next 12 months.
Bangalore�s Real Estate Bank International (REBI) has ambitious plans to reach out to overseas markets with an investment of Rs. 250 m, reports NRI Realty News.
Offices in Sri Lanka, US, UAE, Singapore, Malaysia and Australia will enable real estate services to reach out to non-resident Indians, while REBI�s domestic network will be expanded to 3000 franchises over the next three years.
Pearl Global is also venturing into real estate, as it ties up with Ansal Properties to develop 9.26 acres of commercial land in Gurgaon.
Earlier this month, the Bhoruka Group from Bangalore announced its intention to diversify from its existing power generation business to develop a premium residential project in south Mumbai. The defunct Mukesh Textile Mill property, covering 10 acres will be the site of the new project. The company will also construct an IT Park on 34 acres in Whitefield, Bangalore.
Kolkata based Bengal Shrachi Housing Development in a joint venture with two NRIs has announced the launch of a housing complex, Rosedale Garden, specially designed for non-resident Indians (NRIs). Tapping the desire for fully furnished ready-to-move in apartments for NRIs, the joint venture has invested Rs3bn in this mega project.
Premier realty firm Parsvnath Developers Ltd is set to develop their existing land bank over the next five years by investing over $4 bn. Launching over 100 real estate projects in all its segments, they aim at developing their saleable land bank of 153m sq feet.
They have six projects lined up for Delhi metro as well. Speaking in terms of growth, the company had reported a profit of Rs 2.92 bn in the financial year 2006-07 at an annual growth rate of 110 per cent.
The real estate sector has recorded commendable profit margins, evident from the profits posted by major real estate developing giants in the first quarter. The first quarter was beneficial for almost all real estate developers. Parsvnath Developers posted a record net profit of 179.56 per cent at Rs 1.02 bn against its previous Rs 365.5 m.
Unitech on the other hand has been registering a consistent growth of 8.6 per cent for the last four years. Ansal Properties and Infrastructure Ltd. (Ansal API) reported a net profit of 16 per cent.
Indian realty is growing at 30 per cent, particularly in Tier II and Tier III cities. The $15 bn realty market is expected to reach $ 90 bn within the next eight years. Chandigarh, Gurgaon, Vizag, Coimbatore, Kochi, Jaipur and Nagpur are some Tier II cities witnessing unprecedented boom.
Research has it that realty can give an average return of eight per cent. Realty prices are doubling in some Tier I cities like Bombay, Chennai, Bangalore etc. Residential prices have gone over Rs 5,000 per sq feet and commercial prices are over Rs 10,000 in Tier I cities.
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