‘Flows Into In­dian Realty will Rise by Leaps and Bounds’

The Economic Times - - Companies: Pursuit Of Profit -

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.


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