Real Estate in India
Investment Opportunities in India:
There are two kinds of opportunities available as I view the market. One in infrastructure and other in real estate. Two investments are different not only in types of work and projects but also in the way of investing.
In infrastructure, projects could be like power plants, highways, cement plants, machinery and equipment factories etc. In these projects if you do not want to get in to selling the products, you can just be there till the time of Turn-Key and get your payments done and get out of it. Easiest is Highways. Highways require less technical knowledge. But if you are patient enough to do a long investments power-plants, cement plants, iron bars factories could be a choice. Goverment has special focus on enery and transportation in 10th and 11th 5year plan.
In real estate, projects could be like residential buildings/villas/societies, commercial buildings, malls, car parks, hotels, restaurants. Except residential buildings these investments have to be like really long term. something like you are going to setup a business center in a city which would be costly enough that no company will buy it and but would be willing to give you good rent for a long period of time. So far there was very small players active in this field with 10-12 buildings in a city, except say DLF in Gurgaon and some others in Bombay. In my views this trend is going to catch in next decade.
Non Metro Cities: Companies find it difficult to retain people in city like Bangalore and now pissed with their extra-ordinary demands and city's high cost of living. So they are looking towards cities like Bhopal, Lucknow, Jaipur, Mysore. One would be safe to assume the capitals of the states. These cities provides opportunities for commercial buildings in coming 5 years and once people having purchasing power market will make move towards residential complexes. Even market for contracts of singal units of housing is coming up and ACC has already made a move here.
Foriegn Investment: Currently the industry is highly unorganized and disfragmented. Though due to size of market it would not be possible for any one company to take up major share and hence disfragmentation can not be avoided, but I am highly inclined in setting up clean businesses in this industry which would allow foriegn investors to look at India as a potential market.
So approach I will say is to have tie-ups with companies like LnT, Gammon, Hindustan Constructions if you want to go towards infrastruture with low risk low returns and long term investments. Go with companies like Mantri Developers, Kalpataru Constructions for real estate investments with medium risk and medium returns and about 3-8 years investment. And I will say best would be to launch one's own clean business which highest risk and would give highest returns depending upon the duration of investment. Find out some clean guys who are fed with the way it works today. Guys who have years of knowledge and exprience and yet are excited about bringing the changes, people who have been in the business and understand beurocracies, who can think beyond one city one state and one segment. Once you have these guys setup your own firm.
Between as we are moving ahead and industry is growing, market is emerging for services, like design and consulting. One can even think of out-sourcing of these from US, Germany or other matured markets to India. Indians are good at learning and will deliver the design at very low cost. This kind of work can be done offshore. Few companies like SIEMENS, GE have already done for infrastructure projects but market is yet to come for commercial/residential projects.
I am sorry to say that I do not understand the exact procedures and legalities required for a foreign investor to come into india. Though I just heard that now 100% investement is allowed in infrastructure projects, have a check on that.
There are two kinds of opportunities available as I view the market. One in infrastructure and other in real estate. Two investments are different not only in types of work and projects but also in the way of investing.
In infrastructure, projects could be like power plants, highways, cement plants, machinery and equipment factories etc. In these projects if you do not want to get in to selling the products, you can just be there till the time of Turn-Key and get your payments done and get out of it. Easiest is Highways. Highways require less technical knowledge. But if you are patient enough to do a long investments power-plants, cement plants, iron bars factories could be a choice. Goverment has special focus on enery and transportation in 10th and 11th 5year plan.
In real estate, projects could be like residential buildings/villas/societies, commercial buildings, malls, car parks, hotels, restaurants. Except residential buildings these investments have to be like really long term. something like you are going to setup a business center in a city which would be costly enough that no company will buy it and but would be willing to give you good rent for a long period of time. So far there was very small players active in this field with 10-12 buildings in a city, except say DLF in Gurgaon and some others in Bombay. In my views this trend is going to catch in next decade.
Non Metro Cities: Companies find it difficult to retain people in city like Bangalore and now pissed with their extra-ordinary demands and city's high cost of living. So they are looking towards cities like Bhopal, Lucknow, Jaipur, Mysore. One would be safe to assume the capitals of the states. These cities provides opportunities for commercial buildings in coming 5 years and once people having purchasing power market will make move towards residential complexes. Even market for contracts of singal units of housing is coming up and ACC has already made a move here.
Foriegn Investment: Currently the industry is highly unorganized and disfragmented. Though due to size of market it would not be possible for any one company to take up major share and hence disfragmentation can not be avoided, but I am highly inclined in setting up clean businesses in this industry which would allow foriegn investors to look at India as a potential market.
So approach I will say is to have tie-ups with companies like LnT, Gammon, Hindustan Constructions if you want to go towards infrastruture with low risk low returns and long term investments. Go with companies like Mantri Developers, Kalpataru Constructions for real estate investments with medium risk and medium returns and about 3-8 years investment. And I will say best would be to launch one's own clean business which highest risk and would give highest returns depending upon the duration of investment. Find out some clean guys who are fed with the way it works today. Guys who have years of knowledge and exprience and yet are excited about bringing the changes, people who have been in the business and understand beurocracies, who can think beyond one city one state and one segment. Once you have these guys setup your own firm.
Between as we are moving ahead and industry is growing, market is emerging for services, like design and consulting. One can even think of out-sourcing of these from US, Germany or other matured markets to India. Indians are good at learning and will deliver the design at very low cost. This kind of work can be done offshore. Few companies like SIEMENS, GE have already done for infrastructure projects but market is yet to come for commercial/residential projects.
I am sorry to say that I do not understand the exact procedures and legalities required for a foreign investor to come into india. Though I just heard that now 100% investement is allowed in infrastructure projects, have a check on that.
posted by Black Window at 12:51 PM
1 Comments:
The post is quite informative.
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