‘Flows Into Indian Realty will Rise by Leaps and Bounds’
With the recent regulatory changes, including the implementation of the Real Estate (Regulation and Develoment) Act, 2016, Indian real estate is bound to attract more global funds inflow, said Richard Bloxam, global head of capital markets, JLL. In an interaction with Kailash Babar, Bloxam said the government’s efforts are set to enhance transparency and governance standards in the sector and more institutional equity is heading towards India. Edited excerpts:
The Indian real estate has been going through several regulatory developments, including RERA. Does this change a foreign investor’s view about the Indian property market? These steps are in the right direction and the signals we are getting from the inbound capital for these moves are very positive. These are formative days in terms of the regulatory environment; nevertheless, moves like these are bound to increase competitiveness and maturity of the market by ushering in greater transparency and corporate governance. I strongly feel that India is on a solid wicket with these reforms, and that the interest and flow of capital into the country is surely going to increase by leaps and bounds.
What key transformations will help the Indian property markets attaining maturity? The Indian government has started to play ball to a satisfactory level. A lot of moving parts still need to be addressed such as the process of getting approvals and the timelines of approvals. If handled well, these steps will augur very well for the real estate economy in India. With the government having shown positive intent, the baton now passes to the other industry stakeholders like developers, approval authorities, consultants, etc. Unless all of them are in sync, there are bound to be some issues. While there will still be roadblocks for next 2-3 years, meaningful participation from all stakeholders will be critical in moving towards a more transparent, open and active real estate market.
With the advent of REITs, will India be able to attract more global investors? India has one of the most welcoming REIT regulations in the world today. I hear that apart from equity, regulators have recently also allowed investments through bond structures. This is an honest step by the regulator that will ensure that promoters who do not want to dilute equity can also access the public market for cost-optimised capital. Various policy-level changes make REIT quite workable in India. We expect a few REITs to get listed in next 6-12 months. The performance of these initial REITs will play a big role in deciding the proportion of portfolio and retail participation.
How is the Indian property market placed in the international scenario with respect to pricing and transactions? India is an emerging economy, and more so in terms of its real estate industry. A stable political environment along with better governance will only increase the interest of foreign funds in the country’s real estate market. As far as capital is concerned, there was never a problem. It becomes more available now with active government participation and better market maturity.
How has the Indian property market evolved when compared with Dubai or London? It may not be appropriate to compare these markets, since India is an emerging market, while Dubai and London are matured markets. Rather, I would compare it with other emerging countries such as China, which share similar growth stories though definitely on a different scale. All major global investors such as Blackstone, Brookfield, GIC, ADIA, APG, etc, who are present in China are actively present in India as well. This shows that the country’s real estate market is moving in the right direction. The main challenge for India is infrastructure, not demand or supply.