| Source: Economic Times | | | | Even so, the Indian real estate sector, |
| Indian Real Estate: | | | | despite a temporary lull in its boom, |
| A Deutsche Bank Research report informs, | | | | continues to rake in investors and |
| whereas, there are significant risks | | | | investments alike. As, everyone involved |
| inherent in the Indian real estate | | | | in the market realise, transparency and |
| capital market, which, though presently | | | | relaxation of rules and regulations are |
| small, despite all, has managed to | | | | absolutely necessary for the good times |
| achieve a remarkable growth momentum, | | | | to continue, requisite measures are |
| especially in the private equity and | | | | being taken to resolve the issue. |
| debt markets. | | | | Already, developers and builders keen to |
| While, private debt or bank loans to | | | | ensure nothing disturbs the Indian real |
| commercial real estate have been | | | | estate boom times are adhering to |
| responsible for fuelling growth levels, | | | | international norms and standards in |
| both private equity and private debt | | | | their public offerings. |
| markets are also set to grow | | | | As the sector organises itself, there is |
| significantly in the coming years, adds | | | | no doubt the risks of investing in |
| the report. | | | | Indian real estate capital market will |
| Enumerating the risks presently inherent | | | | evaporate. Patience is the name of the |
| in the sector, the report highlights | | | | game, as India cleans up its act in many |
| liquidity, regulatory, overall market | | | | sectors. This undoubtedly is bound to |
| transparency, property market | | | | happen, as economic prosperity filters |
| transparency and macro-economic risks as | | | | down to all segments of Indian society. |
| the five major threats, which are likely | | | | Chak de to that, it is something |
| to continue for some time to come. | | | | everyone has been waiting for. Let the |
| It also cites regulatory constraints | | | | winds of change set in motion by the |
| being responsible for making it | | | | enterprising IT / BPO industry, sweep |
| difficult for foreign investments to | | | | away the corruption, the long lasting |
| flow into the sector, such as, foreign | | | | legacy of the British Raj. If, it were |
| investors requiring permission from the | | | | not for the Nabobs of the East India |
| Reserve Bank of India (RBI) for owning | | | | Company and the British bureaucrats, |
| property in India. Similarly, for | | | | India might have retained its honest |
| capital repatriation, investors need RBI | | | | past. But, it is a common Indian failing |
| approval, while FDI is limited to a | | | | to learn the undesirable as quickly as |
| small set of opportunities, such as, | | | | possible, while refusing to be taught |
| real estate in small towns. | | | | the best. |
| Then too, transparency is another aspect | | | | For example, instead of taking in the |
| on which the Indian real estate sector | | | | lesson of corruption so well at the |
| ranks very low, with Transparency | | | | knees of our British overlords, would |
| International rating India at 88 out of | | | | that we had, instead learnt civic pride, |
| 150 countries, with regard to perceived | | | | courtesy in public i.e. polite driving |
| corruption level. | | | | with consideration extended to smaller |
| Pointing to the need for more | | | | vehicles, cyclists and pedestrians |
| professional due diligence and valuation | | | | alike, opening and holding doors open |
| institutions, the report said, "Although | | | | for all, etc. etc., would that these |
| market transparency has obviously | | | | were some of the habits imbibed. |
| improved, it is still hard to get | | | | Still, the IT / BPO industry has set the |
| reliable and consistent information on | | | | ball in motion and once the whole of |
| the Indian property market." | | | | India is prosperous, wanting for |
| At the macro-economic level too, the | | | | nothing, then the rest will fall in |
| report also cites problems, such as, | | | | place. Just like weather seems to be |
| inadequate provision of public goods | | | | responsible for a country's culture, as |
| i.e. education and transport | | | | was seen in the hot spell experienced in |
| infrastructure in many regions, while, | | | | the normally cool climes of Great |
| stating volatility in interest rates, | | | | Britain, which unusual hot weather saw |
| inflation and exchange rate risks have | | | | the habitually calm, cool and collected |
| lessened, yet, they still have to be | | | | Brits acting out the behaviour of |
| borne in mind. | | | | unmanageable, unruly, unbiddable |
| It also highlights the fact; the Indian | | | | Indians. In other words, when the |
| investment market is still in its infant | | | | weather is pleasant, good manners come |
| stage, as investors face serious | | | | to the fore, but the heat only manages |
| challenges in finding appropriate | | | | to bring out the devil in us all! |
| investment products. However, upbeat | | | | Perhaps, if India suddenly turned into a |
| about the future prospects of the | | | | cool and pleasantly green land, may be |
| sector, the report points out that in | | | | the Indians too would turn into |
| 2005 nearly $850-million additional | | | | well-mannered, unflappable earth |
| capital flowed into the sub-continent's | | | | dwellers. |
| real estate sector. | | | | Indians across the globe, Chak de! |