The sector comprises four sub sectors - housing, retail, hospitality and commercial accommodations. The Indian real estate market size is expected to touch US$ 180 billion by 2020. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs.
Foreign investors have bought tenanted office space worth over US$ 2 billion in India in 2014, a four-fold rise compared to the previous year, in order to increase their rent-yielding commercial assets in Asia's third largest economy.
Mumbai is the best city in India for commercial real estate investment, with returns of 12-19 per cent likely in the next five years, followed by Bengaluru and Delhi-National Capital Region (NCR). Also, Delhi-NCR was the biggest office market in India with 110 million sq ft, out of which 88 million sq ft were occupied. Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times.
Delhi’s Central Business District (CBD) of Connaught Place has been ranked as the sixth most expensive prime office market in the world with occupancy costs at US$ 160 per sq ft per annum.
Few of current foreign Investments
Blackstone Group Lp is all set to become the largest owner of commercial office real estate in India after a three-year acquisition drive in which it spent US$ 900 million to buy prime assets.
Some of the major investments in this sector are as follows:
- Google Capital has invested in Bengaluru-based online property search platform, CommonFloor.com.
- Omkar Realtors and Developers Pvt Ltd is in talks to raise Rs 400 crores (US$ 66.68 million) from KKR India Asset Finance Pvt Ltd, the local arm of global investor Kohlberg Kravis Roberts and Co LP (KKR).
- Goldman Sachs Group bought shares worth Rs 255 crores (US$ 41.23 million) in Vatika Hotels Pvt Ltd, a company owned by real estate and hospitality firm Vatika Group.
- Softbank Internet and Media Inc will invest, along with Falcon Edge Capital and others, US$ 90 million in Locon Solutions Pvt Ltd, which runs Housing.com - a realty website. The Softbank Group will become the largest investor in Housing.com after this round of funding.
- The Qatar Prince, Hamad bin Khalifa Al Thani, plans to invest Rs 1,000 billion (US$ 16.17 billion) over the next five years in at least 10 smart cities of India. He has already tied up with a Delhi-based businessman for taking the investment forward through projects in real estate, sea ports and airports, besides smart cities.
- Real estate firm Supertech has planned to invest about Rs 2,000 crores (US$ 323.49 million) in Gurgaon over the next few years by launching several luxury and affordable projects.
The Government of India along with the governments of the respective states has taken several
initiatives to encourage the development in the sector; some of them are as follows:
- The Government of Maharashtra has announced a series of measures to bring transparency and increase the ease of doing business in the real estate sector.
- The Government of India has relaxed the norms to allow foreign direct investment (FDI) in the construction development sector. This move should boost affordable housing projects and smart cities across the country.
- The Securities and Exchange Board of India (SEBI) has notified final regulations that will govern real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). This move will enable easier access to funds for cash-strapped developers and create a new investment avenue for institutions and high net worth individuals, and eventually ordinary investors.
- The Telangana Real Estate Developers' Association (Treda) plans to host the Fifth Treda Property Show 2014 at Hitex Centre, Hyderabad. The show will be open to a mix of the populace, including prospective property purchasers, investors, architects and others.
- The State Government of Kerala has decided to make the process of securing permits from local bodies for construction of houses smoother, as it plans to make the process online with the launch of software called 'Sanketham'. This will ensure a more standardised procedure, more transparency, and less corruption and bribery.