Indian real estate’s woeful capital inflow in 2012-13
As compared to real estate investments in the Asia Pacific Region, Indian realty remained dull in 2012-13. REITs worth $10 billion may be listed in case of tax relief provided by the Government of India.
CEO of Jones Lang LaSalle for Asia Pacific, Alastair Hughes revealed his opinions on matters related to real estate market sentiment and major issues on corporate leasing while in Bangalore for a board meeting. With Asia-Pacific beginning to recover in 2012-2013, India, due to a dearth of business counsel, went numb.
India is seemingly poised with the rest of Asia-Pacific now. India didn’t figure much in discussions with international investors because people were sceptic as to where the country was headed to, he opines.
Out of the $125-billion worth of transactional volume of Asia Pacific investments in 2014, only about $1 billion dollars is for India. With a stable government at the Centre, the prospect of capital inflow seems nigh.
He sees that there is a rise in liquidity now. About 60 per cent of investment came from outside the UK the previous year. It is inclusive of the Middle-East, Singapore and China. It is interesting how in Shanghai, almost 40% of buyers came from somewhere outside China. In India, at present, a handful comes from the outside. If one were to look at institutional Indian private equity, it is half a billion dollars.
Thus, as a proportion, FDI is till more than the Indian institutional investment and the primary reason for that is that in India, insurance companies and pension funds are not allowed to invest in real estate. This may well be a deterrent to potential growth of the sector and may well serve to put it into a state of prolonged paralysis for the near future if not amended. Property buying sprees are welcome in one manner for the sector but the government has to take the initiative with regard to loosening up the market for foreign direct investments.
Hence, very little institutional money is available other than the pure private equity money that has been raised in the domestic market. One can only hope that the realty story in India is not a washout owing to severe demands and other constraints.
Source:
Indian Realty News
