The great Indian land chase

Space. That's the need of the hour for Indian industry, looking to grow in every direction. Companies are looking to occupy every inch of land they can lay their hands on to keep on their unprecedented expansion spree.
"Land is finite, money is infinite," quips a developer, hinting that the property boom is far from over. Instead, it has just begun. At least 50 overseas investors coming in with $6.7 billion in equity, which leveraged could spell fresh investments to the tune of $15 billion.
Inevitably, property speculation has emerged perhaps the\nhottest topic across boardrooms. Not just in India. The big guns of global\nrealty are watching Indian real estate prices ever so closely as the country\nlooks for ways to meet a demand for around 1,000 million square feet property\nover five years across seven major cities. \n\nWith rental yields in the US\nand Europe dipping to about 4-5%, squeezed by inter-fund trading given the lack\nof significant new realty development, funds are increasingly eyeing\nopportunities in emerging economies like India. To these global investors, India offers an\nopportunity that can absorb billions of dollars unlike many other markets.\nCushman & Wakefield has estimated cumulative demand across Bangalore,\nChennai, Hyderabad,\nKolkata, Mumbai, NCR and Pune at 840-1055 million square feet for 2006-2010.\nThe prime driver for all these investors is the India economic and demographic\nstory by 2010 India is slated to be the world's third largest economy with a\n300 million strong middle class that's larger than the US's. The IT sector\nalone would require about 66 million square feet of space by 2008, as per a\nFicci survey. Industry expects a demand for 25 million sq ft for 200 malls\ncoming up across the country, besides a significant surge in the hospitality\nsector. \n\nThis is the kind of projection that has made companies with no interest in real\nestate whatsoever till a few years ago enter the field. \n\nThose in the queue include top real estate funds managed by the likes of Blackstone,\nBroadstreet, Carlyle, Deutsche, Hines and Morgan Stanley. nkur Srivastava,\nmanaging director (India) of DTZ Debenham Tie Leung, a leading real estate\nadvisor, sees at least 50 overseas investors coming in with $6.7 billion in\nequity, which leveraged could spell fresh investments to the tune of $15\nbillion. \n\n",1]
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Inevitably, property speculation has emerged perhaps the hottest topic across boardrooms. Not just in India. The big guns of global realty are watching Indian real estate prices ever so closely as the country looks for ways to meet a demand for around 1,000 million square feet property over five years across seven major cities. With rental yields in the US and Europe dipping to about 4-5%, squeezed by inter-fund trading given the lack of significant new realty development, funds are increasingly eyeing opportunities in emerging economies like India. To these global investors, India offers an opportunity that can absorb billions of dollars unlike many other markets. Cushman & Wakefield has estimated cumulative demand across Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune at 840-1055 million square feet for 2006-2010. The prime driver for all these investors is the India economic and demographic story by 2010 India is slated to be the world's third largest economy with a 300 million strong middle class that's larger than the US's. The IT sector alone would require about 66 million square feet of space by 2008, as per a Ficci survey. Industry expects a demand for 25 million sq ft for 200 malls coming up across the country, besides a significant surge in the hospitality sector. This is the kind of projection that has made companies with no interest in real estate whatsoever till a few years ago enter the field. Those in the queue include top real estate funds managed by the likes of Blackstone, Broadstreet, Carlyle, Deutsche, Hines and Morgan Stanley. nkur Srivastava, managing director (India) of DTZ Debenham Tie Leung, a leading real estate advisor, sees at least 50 overseas investors coming in with $6.7 billion in equity, which leveraged could spell fresh investments to the tune of $15 billion.
SEZ,\nof course, is a controversy. And foreign players are keen to keep out of\ncontroversies. This gives the local players to play their own game.\n\n\n\nAnd once they are in, these big funds with corpuses of\nmore than $10 billion each -- may just re-landscape the Indian realty space.\nLike their equity counterparts, they are known to pump in big money and move in\nfast once they have figured out the local dynamics. Before you realise what,\nthey may be sitting on huge chunks of land. \n\nNot surprisingly, global funds are seen as aggressive risk-takers and\nconservative Indians might do well to start preparing for their big-ticket\nentry that's looking imminent. \n\nAnd going by the great land rush across India, it seems India Inc is\npreparing for the deep pockets. Players from Reliance to Tatas to Infosys to\nIndiabulls are engaged in a never-before race to amassing land wherever it is\navailable. We don't associate these names with real estate. And then, there's a\nbigger realty game the special economic zones (SEZs). Everybody is rushing to\njoin the SEZ bandwagon. And the local players are quick to get on to this abnd\nwagon. for example Reliance has already earmarked Rs 40,000 crore (Rs 400\nbillion) for a 25,000-acre project in Haryana. Critics say the whole SEZ\nprogramme is a major land scam whereby corporates are amassing huge chunks of\nland at subsidised rates. And there's widespread criticism that the SEZs are\nnot all about exports. SEZ, of course, is a controversy. And foreign players\nare keen to keep out of controversies. They are much more interested in realty\nprojects in the hospitality (hotels) and IT/ITES sectors as the properties are\nnormally of high quality and offer good returns. ",1]
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SEZ, of course, is a controversy. And foreign players are keen to keep out of controversies. This gives the local players to play their own game.
And once they are in, these big funds with corpuses of more than $10 billion each -- may just re-landscape the Indian realty space. Like their equity counterparts, they are known to pump in big money and move in fast once they have figured out the local dynamics. Before you realise what, they may be sitting on huge chunks of land. Not surprisingly, global funds are seen as aggressive risk-takers and conservative Indians might do well to start preparing for their big-ticket entry that's looking imminent. And going by the great land rush across India, it seems India Inc is preparing for the deep pockets. Players from Reliance to Tatas to Infosys to Indiabulls are engaged in a never-before race to amassing land wherever it is available. We don't associate these names with real estate. And then, there's a bigger realty game the special economic zones (SEZs). Everybody is rushing to join the SEZ bandwagon. And the local players are quick to get on to this abnd wagon. for example Reliance has already earmarked Rs 40,000 crore (Rs 400 billion) for a 25,000-acre project in Haryana. Critics say the whole SEZ programme is a major land scam whereby corporates are amassing huge chunks of land at subsidised rates. And there's widespread criticism that the SEZs are not all about exports. SEZ, of course, is a controversy. And foreign players are keen to keep out of controversies. They are much more interested in realty projects in the hospitality (hotels) and IT/ITES sectors as the properties are normally of high quality and offer good returns.
\n\nBut then, that proves the immense potential of the sector. "Land is\nfinite, money is infinite," quips a developer, hinting that the property\nboom is far from over. Instead, it has just begun. \n\nsource: Prashant\nMahesh and Ashish Gupta, Outlook Business, This article is an abridged version\nof the original. \n\n \n\n \n\n\n\n\n\n\n\n\n\nFrom: VenkataSubbaRao\nAre [mailto:venkata.are@gmail.com] \nSent: Wednesday, January 24, 2007\n23:05\nTo: 'Ajoy@spatialhomes.com';\n'Sagar Yerramsetti'; 'kpelletiy@yahoo.com'; 'pravva@gmail.com'; 'Satish Kumar';\n",1]
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But then, that proves the immense potential of the sector. "Land is finite, money is infinite," quips a developer, hinting that the property boom is far from over. Instead, it has just begun. source: Prashant Mahesh and Ashish Gupta, Outlook Business, This article is an abridged version of the original.