ANSHUMAN MAGAZINE, CMD, CBRE South Asia Pvt. Ltd
ANSHUMAN MAGAZINE, CMD, CBRE South Asia Pvt. Ltd. sees optimism in the real estate market about rising investment sentiments, thanks to the government stimulus efforts. The spotlight continued to remain on emerging locations of India, China and Southeast Asia, he says.
Excerpts of his interview with Sandeep Pattnaik of Gharabari.com..
Q.1. According to some experts, the current Indian realty market is not conducive for investors to invest rather it is more befitting for end-users. What is CBRE's assessment of the Indian Realty sector? How do you rate the slew of policy initiatives undertaken by the present NDA Govt for the Indian realty?
Ans. As per expectations of a gradual market recovery in 2014, the economy bounced back with growth rates above 5.0%. With the Rupee stabilizing, and inflation scaling down, there is optimism in the real estate market about rising investment sentiments. The forecast for real estate investments in 2015 indicates an improvement due to government stimulus efforts.
On the policy front, amendments to the Land Acquisition Bill 2015 were circulated by the Government. Despite the recent amendments in the Bill, however, more needs to be done to ensure that the legislation does not become a hindrance for real estate development in the country. The Government also recently approved certain proposed amendments to the Real Estate Regulation Bill. This has been a welcome move, and is likely to facilitate further investment into India’s realty sector. Improved growth prospects and a balanced budget were further induced by the Reserve Bank of India easing key policy rates in the first quarter of 2015.
Q.2. Developers in India are carrying over-leveraged balance sheets and they have paucity of funds for launching any new project, looking into the current scenario. Do you think, relaxation in FDI norms would provide some panacea to the sector in general?
Ans. Foreign Direct Investment (FDI) restrictions were recently eased for the construction industry, where the minimum area and investment limits were almost halved. Investments were also encouraged in serviced plots and affordable housing. The announcement came as a positive development for the sector, since it is anticipated that the decision will widen the base of investors, especially mid-sized financial institutions. It will also encourage new development projects in prime areas of large cities, as well as in tier II and III towns. Additionally, the Government should try to aim for setting up a minimum limit of FDI up to 49% through the automatic route across all (non-sensitive) industry sectors. Since we require an injection of capital for infrastructure and development, whatever the Government can do to increase capital flow into this area will help the construction sector in particular, and the economy in general.
3. Which cities in India according to you could drive major foreign CAPEX for overall infrastructure development? What is your view about tier-II and tier-III cities in the Country?
Ans. New Delhi retained position among Asia Pacific’s top 10 retail hotspots: New Delhi held on to its eighth position among the APAC region’s top retail markets. Mumbai also maintained its 14th spot in the region. Overall, the spotlight continued to remain on emerging locations of India, China and Southeast Asia.
Around 6% of global retailers to target India in 2015: Global expansion remains high on the agenda for retailers in 2015. According to a CBRE report, around 6% of global retailers would be targeting India in 2015. Leading retail markets in India, has already seen rising enquiry levels from both domestic and global retailers during the first quarter of 2015.
Q4 How do you evaluate Indian Realty space as compared to its Asian counterparts?
Ans. Driven by rapid urbanization, demographic growth, an expanding middle-class and increasingly wealthy households, CBRE forecasts that economic growth in Asia Pacific will remain ahead of the world average in the coming years, which will translate into stronger demand for high quality property. Current corporate and investor confidence in the region remains intact and supports firm demand from both real estate occupiers and investors. CBRE expects rental and capital value growth of around two to four per cent for commercial office, retail and industrial sectors in 2015.
Bangalore led office space leasing in entire Asia Pacific region during Q4 2014: Bangalore has consistently remained the preferred destination for corporate real estate occupiers in the country over the last couple of years. More recently though, Bangalore outperformed itself by catapulting into the league of the top performing office markets of the Asia Pacific region during 2014—in the company of Tokyo and Shanghai.