Indian realtors are venturing into oil-rich cities in the Middle-East to drill out a fortune by building commercial and residential properties. The key attractions in these countries are the sops provided by the government and the favourable laws.
Anuj Puri, country head, Jones Lang La Salle Meghraj, a real estate management and services firm, said the Dubai government is giving free zones for development. Moreover, there is no shortage of skilled and non-skilled Indian workforce in Dubai and the laws are transparent.
"Dubai's foreign direct investments, which started pouring in 2002, have increased drastically because of the government's initiative to attract Indian investors, as profit margins are very high," Puri added.
Akruti City Ltd, the fourth-biggest real estate developer by market capitalisation, plans to foray into the United Arab Emirates, Qatar and Saudi Arabia, citing a booming real estate market there. The company, which was earlier known as Akruti Nirman Ltd, is seeking to have a presence in "all the right markets" to diversify.
"We are definitely planning to get into the Middle East later this year," Akruti's managing director Vimal Shah said. He added that the company is currently undertaking feasibility studies and would not be in a position to disclose investment plans. "The initial investment for the expansion would be mid-level," is all that Shah would divulge. The investment would be in both residential and commercial segments, Shah pointed out
Shah added that Middle East investments were "not dependent" on the money raised by the private equity stake. The company's plan to sell a 12% stake to Citigroup and AIG had fallen through owing to the market volatility.
The Mumbai-based Satra Properties India is also not far behind. It is setting up a real estate subsidiary in Dubai, a senior company official confirmed. However, the official ruled out plans for a joint venture.
Kunal Banerjee, marketing president, Ansal Properties & Infrastructure, is also "optimistic" about the Middle East market. "We plan to go to Middle East... primarily in the commercial segment," he said. The New Delhi-based Ansal might take the joint venture route to expand.
Industry experts believe, with the Indian real estate markets going through a volatile phase, a majority of the big players are setting shop in Dubai owing to the cheaper finance available.
"The developers enter these markets only in the high end segment as it yields good returns on investment. The Seth Group and HDIL are also marginally active in the residential sector in UAE and Dubai," Jones Lang La Salle Meghraj's Puri said.
Moreover, the costs are also less. Developers indicate that the cost of a high-end project in Dubai comes to Rs 4,000 per square feet, where as a similar project in Mumbai would cost about Rs 5,700 per square feet.
Mumbai-based developer Ajmera Group diversified its presence into the Gulf region last year.
Dhawal Ajmera, director, Ajmera Group, said the Gulf market is very easy to enter as the rules there are transparent. Ajmera, with its joint venture with Mayfair Housing for high-end residential projects, plans to complete the project by 2011 with returns flowing in after three years of completion.
"We are spending nearly Rs 650 crore for this project", Ajmera said.
The New-Delhi based developer Omaxe also has "active plans" to target the tourism markets in Dubai, Mauritius and Sri Lanka. "We are planning to go to these markets with an initial investment of Rs 250 crore… to develop resorts and other commercial buildings… . You could see us there by end of 2008," Omaxe executive director Vipin Aggarwal said.
Omaxe is already "in talks" with several companies for a joint-venture.
Many Indian realty biggies have already made mark in the Middle-East. Hiranandani Developers constructed a 90 storey high-end residential project called 23-Marina in Dubai, which was designed by Hafeez Contractor.
In 1991, Shobha Developers expanded their wholly owned subsidiary called Indeset Group in Dubai and, according to Raghav Menon, executive director, Shobha Developers, "We have a high end residential and commercial project of which most of it is sold out."
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