Indian real estate seems to be on the tip of yet another slippery slope. While liquidity is drying up fast in the realty market, the developers as well as the buyers are at the receiving end resulting in further low sales and even lower new launches. Amidst this gloomy economy, investments from foreign real estate developers seems to be the only ray of hope.
Over the last couple of years, global firms have made their presence felt in the Indian real estate market. Be it the Japanese property firm Sumitomo Realty’s investment in a three-acre plot in Mumbai’s Bandra-Kurla complex or LOGO’s venture into warehousing segment or Trump Organization’s foray in Gurugram’s housing market, the foreign firms and overseas developers are clearly showing interest to invest across all the segments- residential, commercial, industrial, logistics, retail and warehousing.
Earlier, residential real estate was the most lucrative and favored option for international players. In fact, $1.4 billion (Rs. 10,046.05 crore at the time) flowed into the segment back in 2015 as compared to merely $900 million (Rs. 6, 459.35 crore) in the commercial segment. However, owing to slowdown on the residential side, the interest of foreign players in commercial has risen significantly. It it reached $2.8 billion (Rs. 20,103.52 crore) in 2018.
New Trends In Foreign Investment
While the commercial segment continues to attract private equity flow with firms like Singapore-based Assetz entering Indian market in 2018, it is the opportunity in student housing, logistics, warehousing, co-working and co-living that presents the new growth room for the foreign firms.
One of the major trends that has emerged is that international brands that they are eyeing warehousing sector in India like never before. Co-working and co-living segment are also seemingly enticing for them and are attracting huge foreign investments. Assetz which has forayed into residential and warehouse space in Bengaluru is now showing interest in co-living segment as well in the city, although they are “still in the phase of identifying the right business model and partnerships,” a senior spokesperson of the company told HT.
Another major trend is that overseas firms are staying away from metros and Tier I cities and interested in spaces on the fringes of the cities rather than in prime locations.
What Foreign Firms Can Do?
In the already over-crowded residential real estate market, it might seem that there is little scope for foreign firms. However, the fact remains that reputable overseas players can bring a huge change in the market.
Apart from bringing in the liquidity into the segment, international brands give the buyer a sense of assurance and security, something which they desperately look forward to in the present times. Additionally, international brands are associated with not just prestige but also with professionalism in the way they work and execute projects.
Collaborations with foreign firms, thus, will not only bring in liquidity but also the expertise, latest technology and most importantly, the lost trust among buyers with respect to housing and residential market.
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