Billions of USDs for Indian Real Estate

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ELEVEN INDIAN cities, apart from the obvious top eight, are experiencing rapid economic growth due to increasing investments across industries, according to a Federation of Indian Chambers of Commerce and Industries (FICCI) and Ernst & Young Indian Real Estate Report. These cities include Surat, Chandigarh, Nagpur, Vadodara, Visakhapatnam, Jaipur, Thiruvananthapuram, Kochi, Nashik, Indore and Ludhiana.

While, the Ernst & Young City ranking indicates that cities such as New Delhi, Mumbai, Bangalore, Hyderabad, Kolkata and Chennai have grown very fast and the six most developed markets in India have commenced on the path of maturity and have already started becoming highly competitive.

As per this report, Panaji, Chandigarh, Pune and Ahmedabad compete with the top six cities in terms of Quality of Life.

While cities of Gujarat dominate the Urban Governance Index, Chandigarh ranks sixth on the City Prosperity Index followed by Hyderabad and Chennai. Delhi is the obvious leader in infrastructure with Chennai and Hyderabad faring well on the Infrastructure Index. Visakhapatnam and Nagpur have ranked high on both Business Environment and Infrastructure Index.

The report further says that driven by dynamic policy interventions, free flow of cross-border capital, entry of large international players, big ticket domestic IPOs, the Indian Real Estate Sector is clocking a growth of more than 30 per cent per annum.

Based on five critical indices developed by Ernst & Young comprising City Prosperity, Urban Governance, Business Environment, Infrastructure and Quality of Life, the FICCI-Ernst & Young Report reveals that as many as 11 Indian cities apart from the obvious top eight are experiencing initial phases of rapid economic growth.

The report notes that a shift towards these cities, with medium term potential, is primarily due to the spill over demand for commercial office space and also to leverage inherent cost and labour advantages. Such an influx has driven demand for residential, commercial, social and hospitality infrastructure in a short period of time considering which developers and the investor community has evoked keen interest in the changing landscape.

As a part of this report, Ernst & Young also conducted a survey which revealed that close to 80 per cent of the respondents believe that in short to mid-term (three to five years), India as an investment destination is “Excellent” or “Very Good” vis-à-vis other Asian markets (China, Vietnam, Malaysia, Indonesia, Thailand).

More than 50 per cent of the respondents believe that high growth trajectory (y-o-y growth of 25 per cent) will continue for the next two to three years, with more than 15 per cent believing that the same will last for more than five years.

All respondents believe that more than USD 5 billion will be invested in the Indian Real Estate over next three years with around 20 per cent believing that the deployment will be more than USD 20 Billion.

In terms of focus on emerging asset classes close to 65 per cent of the respondents believe that logistics and warehousing infrastructure will be their preferred asset class for investment.

According to Dr Amit Mitra, Secretary General, FICCI, “Institutionalisation and evolution of Indian real estate will get a fillip from large scale investment in infrastructure planned by the Government over the next four to five years. The report foresees Healthcare, Logistics & Warehousing, Mega Integrated Townships, Airport / Port based Business District, Mass Housing, and Education, assets and development formats emerging in the firmament of Indian Real Estate in the coming years.

Source : MeriNews