With regulatory changes, including easing of foreign direct investment rules and better execution capabilities, Indian realty is being preferred as an investment destination by global investors. The global investment community is closely tracking the performance of the sector and the confidence they would derive from this will bring in robust inflows into this space, said Stuart Roberts, CEO, Asia-Pacific, Cushman & Wakefield.
In an exclusive interaction with ET’s Kailash Babar, Roberts said that the government can improve the much-needed transparency by taking processes and approvals online and such initiatives will improve the Indian property sector’s perception in the eyes of international investors. Edited excerpts:
What’s your assessment of the overall investor sentiment and confidence towards real estate as an asset class in India? The India investment market is buoyant, up 84 per cent year-on-year. However, by global standards, it remains small at $2.8 billion. Foreign investors are most active (over domestics) and are mainly targeting Delhi and Mumbai.
In India, PM Modi’s biggest contribution thus far has been getting the focus back on development issues and instilling a fragile sense of optimism. Some reforms have taken place (the real estate proposals from this month are quite ground breaking), not to mention that some more big-ticket items are in the works.
Do global investors view the Indian property market as an investment destination? India is definitely on the radar for many sovereign wealth funds and pension funds and they are looking for stable returns from India. Currently, they prefer leased assets which are devoid of developmental risk, but eventually their initial investment experience would give them confidence to underwrite semi-developed and under construction projects.
The international investment community is closely watching the performance of current investors and even these investors can write larger cheques in future once they find success with initial investments. So, India is a promising destination for investment in real estate, especially for core assets.
Which are the international best practices that Indian real estate developers and government authorities can adapt to? For improving the transparency levels, government authorities can make data available online and I understand some state governments are even talking about doing the entire approval process online and such initiatives will improve the perception of Indian real estate developers in the eyes of international investors. Focusing on execution is another area where the Indian real estate sector as a whole can improve.
How can India’s real estate market adapt to accommodate global, regional and local economic dynamics? Housing for all is an idea of the current government and to achieve that, the Indian real estate industry should adopt proper town planning initiatives, where the government provides infrastructure and reasonable cost of land. Lack of infrastructure is creating shortage of accessible land near economic centres and without improving the infrastructure, India will not be able to create a large pool of urban land which can cater to the housing shortage for the economically weaker sections of the society.
What are the key strategies players are adopting to align themselves in the current economic scenario, particularly in India? There are two things that have been dogging the Indian market. First, is the transparency of the development community, and the second being consistency in the product. However, developers are increasingly working towards creating assets that meet global standards that are investible by global financial companies.