What Investors Look For In Indian Real Estate

Arvind Jain

Foreign investors into Indian real estate are looking at two primary aspects - an investment-friendly policy environment and project opportunities by established, credible developers. They are taking the long-term view and not looking at immediate gains, but at sustainable and assured returns on investment.

In particular, the policies on land acquisition play an important role in FII sentiments because it is only when reputed developers can procure large, contiguous tracts of land and launch
investment-grade projects on them that the most attractive investment opportunities present themselves.

Thanks to improvements in transparency and the watchful auspices of the RBI, the speculative short-term view has all but vanished in Indian real estate - the only short-term speculators still remaining are those who favour small projects being launched on the peripheries of most Indian cities by dubious one-off developers.

Foreign as well as domestic investor sentiments have improved massively since the arrival of a stable, pro-business government at the centre. In fact, India is now being seen as one of the five engines of the global economy, and is being taken more seriously than even China. 2014 saw a significantly larger amount of private equity investments into Indian real estate as compared to 2013, and given the fresh enthusiasm that is prevailing, this trend is very likely to sustain over the next two to three tears at least.

However, the investments being funneled into Indian real estate will not show interest in smaller developers without the balance sheets to prove their capitalization, delivery capabilities and the ability to secure good land parcels in the best locations. The future will definitely see a lot of consolidation on the market, wherein bit players will yield to larger developers with these attributes.
 
Pune is one of the Indian cities whose real estate market is drawing the most attention for large institutional investors as well as retail investors. There are good reasons for this - in the first place, it has well-entrenched and rapidly growing IT/ITeS and manufacturing industries which drive demand for both commercial and residential real estate. There is a huge amount of demand for properties that meet the requirements of commercial space occupiers and home buyers.

Also, the Pune real estate market is dynamic and constantly growing, both in terms of geography as well as property typologies and configurations. Developers in this city do not compete with each other only for buyers, but also in terms of bringing fresh and more interesting features to their offerings. When a market sees the right kind of supply that is in tune with what buyers want, it is evolving well and there can be no danger of stagnation.

This is precisely the kind of environment that attracts investors. With a very proactive and savvy Chief Minister who is focused on growth and knows that real estate plays an integral part in this growth, Pune's property market will become an increasingly important destination for institutional and well as smaller retail investors in the times ahead.

About The Author 
Arvind Jain is Managing Director of The Pride Group, a world-class property development conglomerate that is changing the cityscapes of Pune, Mumbai and Bangalore. Established in 1996, Pride Group has built and delivered over 10 million sq.ft. of constructed area. Pride Group has recently launched Pride World City, the 400-acre luxury mega-township at Charholi, Pune.