India real estate: price correction looms

Revenue visibility is better. In some markets, office or retail may be safer but mostly housing trumps these, as many US investors, who were earlier focused on office buildings, are now discovering.

We have eighteen on-going developments, across large cities such as the greater Delhi area and Calcutta, to smaller cities such as Tirupur, Meerut and Bhubhaneshwar. We consciously trade off the liquidity characteristics of a large market for the higher margins in smaller city developments. On the whole, the portfolio is going well, though some aspects like licensing can be difficult. I do not believe these problems are unique to India though.

Indian real estate on a roll

The Indian real estate has gained a lot of traction from both within and outside the country in the past couple of years. A huge pent up demand and access to funds were the key drivers for propelling the Indian real estate market into an overdrive.

The industry received the much-needed first shot of funding in 2005 wherein the foreign direct investment (FDI) route was opened up for Indian real estate. Since then the Indian real estate sector has transformed to reach $57 billion in 2007, and has a potential to reach $90 billion by 2012 according to the Eleventh Five Year Plan.

India's Primary Real Estate plans $500 mln fund

Foreign investors have taken advantage of such funds to rush into property development in India since it eased rules on inward investment in the construction industry in early 2005, sparking rampant land speculation and a near quadrupling in prices.

But despite signs of a slowdown -- home sales volumes have fallen by one-fifth in Mumbai and 40 percent in Bangalore in the last year -- the head of Primary Real Estate, Ashwin Ramesh, is convinced that North American and European investors will invest.

Foreign and domestic funds poured $6.8 billion in India real estate

The US-based hospitality and real estate fund Walton Street Capital (WSC) has decided to invest Rs 1,000 crore in the booming Indian real estate market in 2008. It has already tied up with property developers for investing Rs 600 crore at the project level. These investments will be made in special purpose vehicles (SPV) floated specially to implement projects.

The fund is in talks with three Indian developers for the remaining investments, which is expected in a couple of months, said WSC managing director Sourav Goswami.

India still reluctant on real estate trusts

Overbuilding in some areas worries investors. For example, around 50 malls are being built in the New Delhi suburb of Gurgaon. With the information technology industry thriving, about 100 million square feet, or 9.3 million square meters, of office space is to be built over three years, equal to all the office blocks in Washington.

An economy growing at about 9 percent a year has helped push up Mumbai office rents by a fifth in 12 months, but as new developments pop up in India's main cities, old areas can also quickly go out of fashion.

Urban redevelopment plans for Mumbai, India's largest city

As India's economy booms and Mumbai becomes a major Asian financial center, property there is increasingly scarce and costly. Property values in south Mumbai, for example, have risen 10% to 40% during the past 12 months, and could rise 5% this year, according to Macquarie Securities.

The "only way to generate land and create space for new commercial expansion of the city, is to clear these slums," says S. Sriniwasan, chief executive of Mumbai-based Kotak Real Estate Fund.

Indian Inflation Rises To Five-Month High

MUMBAI -Inflation in India has quickened to a five-month high, validating the central bank’s concerns and its decision to hold interest rates earlier this week.

The wholesale price index stood at 3.93% for the week ended Jan. 19, up from 3.83% the week before, the Ministry of Commerce and Industry said in New Delhi Friday.