Investors convinced of 'certainty of investment returns' in Indian real estate: Experts By Gurdip Singh

Investors are convinced of a strong certainty on returns on their investments from the real estate in India as the positive but disruptive policies have resulted in transparencies, according to industry executives.
Foreign funds, including sovereign and pension funds, are looking at investment in India, following recent investments by Canadian Pension Fund, Qatar-funds, GIC and Temasek of Singapore, said Sanjay Dutt, Chairman of Federation of Indian Chambers of Commerce and Industry Real Estate Committee.

"Now we have the right policies in place," said Dutt, pointing out that developers have track records to show, investors can understand the regulatory and taxation environments, study demand and work out currency risks. Investors can make an informed decision and hedge their dollar to manage currency risks, he said of the system that is being shaped up by the policies such as the Real Estate Regulatory Act and the Goods and Services Tax, among others.

"A lot of investors are now convinced that there is a certainty of investment returns in India and potentially higher returns given the risk of emerging market and certainty has become more stronger because of this ability to make an informed decision," said Dutt, who is leading a FICCI Real Estate delegation in a series of meetings with Singapore-based investors from April 1-3, 2019.

However, India's massive infrastructure development including real estate cannot be funded through internal resources. Foreign investment is required, added Dutt, also the Managing Director and CEO of Tata Realty & Infrastructure Ltd. "After RERA and GST implementation, all developers are working in corporate-style with no delays in delivery of projects. This gives the banks the confidence to extend loans," added Mohit Goel, chief executive of The OMAXE and part of the delegation.

In about three years, when RERA and GST are absolutely streamlined and dealings are made "very transparent", banks will start funding developers' land acquisitions, believes Goel. He sees the real estate industry in a strong position in the coming decade, with 10-12 developers in each of the country's four zones ? north, east, west and south. Over 80 per cent of the real estate industry has consolidated, shaken by the positive but disruptive policies such as RERA and GST, according to Goel.

"The land owners are now approaching developers for a very attractive venture models which make it asset-light for developers," added Getamber Anand, chairman and managing director of ATS Infrastructure Ltd.

"Price of land has rationalised over the last five years because of these disruption and changes by the policies," he said of the industry's biggest challenge in gathering good quality land for commercial, residential and industrial developments. "I see businesses taking off very aggressively. We are in the election year and if we get a very stable government which we are expecting, the business will boom for the next 10 year," he said after addressing investors on "Opportunities in Indian Real Estate" on Monday.

Anand urged foreign investors to partner with the right developer as 100% FDI is allowed in the Indian real estate.

"I would advise funds to do a due diligence on their promoter. More than feasibility of the project, you must see the blood line of the promoter," stressed Anand, also a member of the FICCI delegation. The industry has begun to see serious equity infusion by foreign funds, he said, calling on other institutions to start dialogue with ?the people they think they like to partner with for the next 10 years.

"The next 10 years will be a golden period for anybody who is associated with real estate in India," assured Anand who has spent over three decades in the real estate business.

"The public sector banks are flushed with capital and in a very healthy state. Funds are flushed with capital, but it is only that people are little skeptical about identifying the right partner to deploy money," said Anand. But he called on banks and financial institutions to review their lending rates which varies from 12-15 per cent from Banks and Non-Banking Financing Service companies. "We want it down to a single digit at around 9 per cent," he said of the need to support developers as pace of development accelerates.

The investors meet and delegation visit was organized by FICCI and Enterprise Singapore, a state agency promoting Singapore investors globally.