American investors high on Indian real estate
November 28, 2007
The sub-prime crisis has not had any negative impact on the Indian property market. On the contrary, analysts say, that an increased number of American investors are now looking at the Indian property market as a safer investment bet.
“The region is enjoying sound property market fundamentals. To date, the credit crunch has not significantly impacted the markets here. Liquidity levels are still high, and both local and foreign investors have maintained their allocations to real estate,” says a report by real estate consultant Jones Lang La Salle Meghraj (JLLM).
According to JLLM senior manager Abhishek Kiran Gupta, in the backdrop of the sub-prime crisis, many small and mid-sized American funds are looking at the India market. “Some bigger funds, which entered 2-3 years ago, are now very comfortable with the Indian market. Their experiences have become an attraction for many smaller as well as some non institutional investors from US to put money in the Indian property market so as to minimise risks,” he said.
According to DTZ Investment Advisory director Ambar Maheshwari, the initial reaction of the sub-prime crisis in India too was that of caution, as the impact was unknown. “Now that the situation is better understood, it is evident that there is no negative impact on India. On the contrary, it is catalysing the interest of many US based investors towards India,” he said.
Interestingly, some of these smaller US-funds are even looking at experimenting with investments in the emerging real estate areas. “Residential, commercial and hospitality have been the evergreen options as far as foreign investors are concerned. Many small and mid-sized investors are now looking at creating logistics and infrastructure funds, with a average corpus size of about $15-20 million,” Mr Gupta said.
The negligible impact of the sub-prime crisis on the Indian real estate market also becomes evident by the recent studies conducted by leading consultants C B Richard Ellis (CBRE) and Cushman & Wakefield. Reports by both these firms project leading Indian commercial destinations, Mumbai and Delhi, in the fastest growing markets, both in terms of office space and retail. Interestingly, CBRE has put Mumbai as the second most expensive office space market in the world.