June 25, 2007

India- A New Land of Hope

Driven by its booming economy and sheer volumes courtesy the world's largest middle class conglomeration, several leading Middle East real estate companies and property majors have made a beeline to India. Emaar Properties, Nakheel, Al Ghurair Group's ETA Star, Al Rostamani Enterprises' KM Properties, Dubai Properties have all unveiled major plans, investing in hotels, malls, healthcare, housing, IT parks and integrated townships in Mumbai, Delhi, Chennai, Bangalore, Hyderabad and other places. This week, Bahraini companies too joined the bandwagon with Khaleej Finance and Investment (KFI) partnering with Kuwait Investment Company (KIC) and Kuwait Finance House (KFH), also known as Baytak, to manage and promote a $200 million Indian private equity fund targeting a variety of activities in growing sectors, particularly India's real estate and industry. So much so, investments into India's vibrant property market from the Gulf region have crossed the $35-billion mark and the combined value of the various real estate projects being developed by them has been put at a staggering $37 billion. This accounts for about 10 per cent of India's projected infrastructure-spend of $350 billion over the next five years to give a fillip to its infrastructure. What more, the Gulf investment volume is poised to cross the $50 billion-mark by the yearend, say industry analysts. India began allowing cent per cent FDI under the 'automatic route' in the construction and development sector from February 2005, to spur investment in the vital infrastructure sector and pave the way for global real estate biggies into the country. It's real estate and construction sectors attracted foreign direct investments (FDI) to the tune of $3 billion in 2005-06, out of a total FDI of $19 billion. Analysts say the yield on real estate investments in India is between 15 per cent and 18 per cent making it a beehive for Middle East real estate majors, a fact that is reflected in Nakheel and Emaar MGF committing $22 billion between them towards property developments across India. Properties giant Emaar recently came out with projects worth around AED140 billion ($38.1 billion) for the coming four years, with AED115 billion spent outside Dubai, including a sizeable chunk in India. Emaar, the largest property developer in West Asia, floated a joint venture in India with Delhi-based MGF Developments - Emaar MGF Land Private Ltd - to develop SEZs, residential projects, hotels and malls and hospitals with an investment of $12 billion. Earlier this year, leading real estate developer DLF tied up with another property major Nakheel to develop two townships in the country at a cost of $10 billion. Similarly, Dubai-based developer ETA Star Properties announced its plans to develop a $923 million IT park at Chennai, taking the group's total investment value in India to $4.35 billion so far.Also on the anvil is the Gulf Finance House-promoted $395 million Energy City India on the lines of Energy City Qatar coming up on a 600-acre site in Navi Mumbai. ETA Star is developing a one million-square foot tech park in Chennai's IT corridor and a mall.The company also launched a 10-tower residential project in Bangalore besides a join venture vehicle with a Mumbai company to develop service apartments, residential buildings and a mall in upmarket Juhu area. The company is also foraying into Kolkata and Hyderabad.