Foreign investors are now seeing the potential of India's real estate market that it is now among their preferred destinations in the Asia Pacific region, as shown in PricewaterhouseCoopers (PwC) India's report in an article by Live Mint.
In 2014, an overwhelming 50% of India's investment activities were from foreign investors - a huge improvement from 2013's 26% - says PwC's report titled Emerging Trends in Real Estate Asia Pacific 2016 released Wednesday.
"Flows of foreign capital to India began increasing dramatically at the end of 2014, with the amount invested growing almost 200% year-on-year by the middle of 2015," the report cites commercial property data source Real Capital Analytics.
According to PwC, foreign investors now have greater interest in India's real estate market after its government's recent liberalization measures. Among said measures is the decreased minimum size of built-up areas required from 50,000 square meters to 20,000 square meters which as a result brought "increasing confidence among institutional investors they can find an exit", it said.
"From a deal structure perspective, while mezzanine financing continues, a shift in the favour of equity structures has occurred, especially in big-ticket transactions in commercial assets such as business parks and IT parks," said Abhishek Goenka, partner, PwC India.
The report also pointed out that a significant number of India's corporate real estate owners are foreign private equity funds, after only beginning in 2011-12.
Overtaking Mumbai and New Delhi, Bengaluru is currently the most preferred real estate destination among other Indian cities. The city's growth is attributed to its flourishing technology industry as well as the large availability of skilled labour necessary for the success of capital-blacked start-up ventures.
There is also no reason of concern with the high number of inventory of commercial office structures in Bengaluru as experts are confident that this will be mitigated by an equally high absorption rate, says the report.
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