INDIA BUSINESS WORLD - JUNE - JULY - 2007
The Month that was ...

GULF INVESTMENT IN REALTY CROSSES $35-BILLION MARK

INVESTMENTS pouring into India's hot property market from the Gulf region have crossed the $35-billion mark. The combined value of the various real estate projects being developed by Gulf-based real estate firms has touched $37 billion or Dh 135.79 billion.

According to analysts, the yield on real estate investments in India is between 15% and 18%, making it a stable investment destination. It therefore comes as no surprise that real estate majors like Nakheel and Emaar MGF have committed $22 billion between them towards property developments across the country.

"The growth today is in India. While other regions too are lucrative for real estate investments, India stands out because of its sheer volumes," said Anurag Mathur, deputy managing director of Cushman & Wakefield, India.

Industry experts say the investments by Gulf-based firms would cross $50 billion by the year end. Incidentally, the country's real estate and construction sectors attracted foreign direct investments (FDI) to the tune of $3 billion in the previous financial year, out of a total FDI of $19 billion. The $37 billion investments so far roughly account for 11% of India's projected infrastructure spend of $350 billion, an amount the country is expected to spend over the next five years to improve its infrastructure.

"The last few years have seen several private real estate players from the Gulf enter the country. Many of these firms, with global operations, invest in India's real estate market for they're looking to hedge risk," said retail and real estate analyst Susil Dungarwal.

Fueling this growth are companies like Emaar MGF, which announced its plans to develop SEZs, residential projects, hotels & malls and hospitals in the country at an investment of $12 billion. Earlier this year, leading real estate developer DLF tied up with Nakheel to develop two townships in the country at a cost of $10 billion.

Similarly, Dubai-based developer ETA Star Properties announced a month ago its plans to develop a $923 million IT park at Chennai, taking the group's total investment value in India to $4.35 billion so far. In the pipeline is the Gulf Finance House promoted $395 million Energy City India, being modelled on Energy City Qatar. This project, currently at the equity raising stage, will occupy a 600-acre site in New Mumbai.