India’s move to ease rules on foreign investment in its thriving property sector has set off a flurry of activity, with mainly U.S. investors jostling to be first through the door.
Some analysts expect an inflow of up to half a billion dollars within a year of India’s decision in February to cut the minimum size for foreign-financed projects and permit overseas firms to set up funds to invest in property.
Asia’s fourth largest economy, fuelled by the outsourcing of work by cost-cutting Western firms, is expected to grow by about 7 percent this year, spurring demand for offices, homes and upmarket malls.
“Since this liberalisation there’s been a good amount of interest – from at least a dozen large funds, mostly from the U.S.,” said Anuj Puri, managing director of Chesterton Meghraj Property Consultants and head of the real estate committee of the Confederation of Indian Industries.
The funds are braving India’s legendary red tape: Analysts say India has poor foreclosure laws, property registration processes are tedious and property tax, transaction law and document systems vary from state to state.
Still, investment bank Morgan Stanley and private equity firms JP Morgan Partners and Warburg Pincus, structured products company Broadstreet Group and private U.S. developer Hines have been sniffing around for deals, analysts say.
Indian property development has surged in the past three years, helped by an annual doubling in demand for office space as foreign firms poured money into technology businesses and call-centres in Bombay, Delhi, Bangalore and Hyderabad.
The government estimates that India, with more than 1 billion people, needs to build some 10 million homes annually. The urban population grew more than 30 percent in the 1990s.
More: financialexpress.com
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