The Indian real estate sector, which is expected to grow seven times in size from $ 121 billion in 2013 to $ 853 billion in 2028 but currently lacks the technology and funding, will provide a sizeable opportunity to global investors in a number of areas, according to a recently released report by KPMG in India and the National Real Estate Development Council.
Titled ‘Indian real estate – Opening doors’, the report said that though several global firms had already ventured into the Indian real estate sector over the last decade bringing new technical capabilities, improving efficiencies, enhancing quality and providing funds, the big gap that still exists between demand and supply offered more opportunities to global players.
“After a slowdown in PE investment, the Indian real estate sector is witnessing increasing interest from large global funds. Several new investors such as Qatar Investment Authority, Canada Pension Plan Investment Board, Abu Dhabi Investment Authority, Standard Chartered Bank, Proprium Capital Partner, Hayat Invest and Clearwater Capital have committed significant investment in the India real estate sector, especially in commercial properties. The investors are mostly looking out for high quality commercial properties which are either complete or nearing completion as these assets can ensure immediate return. Blackstone, among the largest global investor in India, invested a significant amount in 2013,” it said.
Since 2005, around $ 10.5 billion has flown into the Indian real estate sector through the Foreign Direct Investment route.
In India, the residential segment contributes 80 percent to the real estate sector. The commercial real estate market comprises office, retail and industrial segments and is primarily dependent on growth in services and industrial sectors of the economy.
Listing out the areas where intervention was required to support the phenomenal growth being witnessed in the sector, the report said that opportunities existed for global real estate stakeholders as developers and investors, architects, design, engineering and construction contractors, project management consultants, material suppliers and vendors and facilities management service providers.
The report classified the challenges facing the Indian real estate sector into five broad categories – lack of suitable developable land, strict and prolonged regulatory process, lack of clear land titles and title insurance, inadequate funding channels and shortage of manpower and technology. It further said that recognizing the challenges at hand, the government had introduced several key reforms recently with many more lined up to improve global inflow of funds and promote growth of the sector.