High returns make realty investors ignore risks, says experts
Dec 29, 2013
Source : The Economics Time


MUMBAI: The ongoing slowdown and steep rupee fall are among the factors making the country a riskier realty destination for global investors, even as it continues to be a high return market, say experts.

According to a report by PricewaterhouseCoopers (PwC), mature markets like Tokyo, Shanghai, Jakarta, Manila and Sydney have emerged as the most preferred real estate investment destinations compared to the domestic market.

Even though cities like Bangalore, Delhi, Chennai and Mumbai have emerged in the list of 25 top investment spots in the realty space, they ranked at 20th, 21st, 22nd and 23rd positions, respectively this year.

"The general slippage of the domestic cities in the global rankings, coupled with the retention in the top 25 list, tells the story that there is the negative impact of the combination of market, currency, regulatory and political risk which continue to result in a general sense of nervousness and the tendency of foreign investors to stay on the sidelines," PwC India executive director Gautam Mehra said in a report.

According to him, though the challenges are currently portraying the country as a riskier market for global investors, India's potential continues to keep interest levels going.

Echoing similar views, RICS South Asia Managing Director Sachin Sandhir says high inflation and interest rates are affecting the investor sentiment.

"Amidst global economic uncertainty, fiscal consolidation and the prevailing local market conditions, investments have come down compared to previous years. But it still holds potential for giving healthy returns in future," he adds.

As per the industry estimates, private equity firms are sitting over about $2 billion awaiting an opportunity for deployment in the real estate sector. But wary investors and fund managers now want to put in their money only in those projects with strong fundamentals, Sandhir points out.

According to Diwakar Rana, who is a director at Cushman & Wakefield, investors are looking at stable assets with safer returns.

"Due to the prevailing challenges, investors are looking at markets and assets which are stable. However, the interest in challenging economies continues as the return of investment is higher in high risk markets," he says.

While more mature markets give 5-8 per cent returns on investment, riskier market give returns of 18-20 per cent.

Rana further says, "There is a trend that investors park some of their funds in stable economies where returns are safer but lesser and some in high returns markets which are riskier, though the proportion may have changed with investors preferring mature markets to riskier, the interest in the latter continues."

According to industry estimates, a total 393 private equity deals worth $9.67 billion were signed between January and November this year, out of which only 6 per cent or $40 million were in the real estate sector.

However, Sandhir says, this is likely to continue till the general elections.

Latest Realty News

Oversupply affects real estate
Dec 28, 2013
MUMBAI:High price points and sticky borrowing costs have weakened buyer sentiment in the commercial and housing markets but realtors hope that since pent-up demand has increased over the three year slowdown in demand the first quarter of 2014 could see an upturn.
Factors that impacted Mumbai’s real estate in 2013
Dec 28, 2013
MUMBAI: Though Mumbai is the financial capital of India, the real estate market of the city has not been very encouraging in 2013 as the over-all performance graph was stagnant. The reasons for stagnancy could be justified due to various factors that impacted the market. A few of them have been discussed here:
2013 roundup: Despite key reforms, realty industry remained stressed
Dec 27, 2013
MUMBAI: Economic slowdown, inflationary pressures, volatility in foreign exchange and stock markets, together with liquidity crunch and costly debt, took a toll on India's real estate sector in 2013, with investor sentiment taking a severe beating despite a number of reform initiatives undertaken by the government.
Credai supports PMC’s new ways of approval to clear building plans
Dec 27, 2013
PUNE: The Confederation of Real Estate Developers’ Associations of India (Credai) Metro has welcomed the procedural changes in project approvals brought about by the Pune Municipal Corporation (PMC).
SEBI proposal on real estate investment trust set to get RBI nod
Dec 27, 2013
MUMBAI: The much-awaited Real Estate Investment Trust (REIT) regime has inched closer to becoming a reality, with the banking regulator keen on approving changes to attract foreign investments.
Realty prices may come down by up to 20% if corruption is reined in: HDFC chief Deepak Parekh
Dec 27, 2013
MUMBAI: Rooting out corruption could help lower home prices by as much as 20%, said Deepak Parekh, chairman of Housing Development Finance Corp, India's biggest mortgage lender, putting the blame for graft in the system on errant bureaucrats and faulty policies.
NRIs look to Gurgaon flats for bumper returns
Dec 26, 2013
PUNE: If you get to choose between buying a beach house in Florida and an apartment in Gurgaon, what would you prefer? While the great American dream may seem like obvious choice to many, the dollar-rich expatriates think other way around.
Mumbai real estate market – an overview for 2014
Dec 24, 2013
MUMBAI: The year 2013 was an eventful year for the Indian Real Estate sector with the introduction of the Real Estate Regulatory Bill and the Land Acquisition Bill in the parliament. With such developments happening, there is high optimism about the coming year – 2014. There is hope that 2014 will see a positive shift from the earlier years and will bring in the much required stability and transparency in the property market. Mumbai’s real estate market too, expects to see stability and healthy
Small-cap, mid-cap stocks shine as Sebi relaxes norms for trading in illiquid stocks
Dec 23, 2013
MUMBAI: A bout of volatility was witnessed as key benchmark indices recovered from lower level after trimming initial gains in morning trade. The market breadth, indicating the overall health of the market, was strong. The market sentiment was boosted by data showing that foreign funds remained buyers of Indian stocks on Friday, 20 December 2013. The barometer index, the S&P BSE Sensex, was up 86.68 points or 0.41%, off close to 40 points from the day's high and up about 85 points from the day's
Banks try to attract home buyers with low interest rates
Dec 23, 2013
MUMBAI: Barely days after the Reserve Bank of India (RBI) surprised the Street by keeping the repo rate unchanged, banks and mortgage lenders have started lowering the interest rates on home loans.

Latest Realty News Of State

Realty Talk's