Foreign Investments Go Up In Real Estate After A Long Time

What is the state of foreign investments in India? Recently, the External Affairs Minister, Sushma Swaraj said that Rs 14 lakh crore had trickled into the Indian economy in the last four years, 43 per cent higher than what it was between 2010-14. While the honourable minister has credited this success to the several new schemes that the government has rolled out making it “people-centric”. However, it may take us a while to understand whether the economy is en route success has given the mixed bag of opinions. Here’s a look:

Capital inflow at its best

India is 19th among 73 countries in terms of foreign capital inflow, pointed out a consultancy firm in its report. Compared to 2017, capital inflow has taken a 31 per cent jump to settle at $2.6 billion. While the top three countries in this list include the US, the UK and Germany, India's jump is an encouragement. Experts feel it speaks of the reforms with respect to real estate regulations, implementation of various taxes, push to affordable housing, measures to curb black money as also the attractiveness of the Indian property market. 

More eyes on growth, employment

Investors have seen India develop into a venture skill hub and this has invited investments into the Indian start-up ecosystem. As per sources, private equity funds in India has been pouring in from Europe, Japan and West Asia and the claim have been that friendly tax relief policies, as well as a conducive start-up environment, has triggered this growth.

Let’s take a look at the numbers. In 2017, $16, 728 million worth of funds poured into start-ups which is 96 per cent higher than what it was in 2016 at $8,497 million. However, the number of such deals did come down from 175 to 148. Experts believe that this could be taken positively, that investors are now looking at the quality of entrepreneurs than the number.

As years go by, the Indian start-up system has improvised from being merely rehashed versions of the existing companies to maturing and developing innovative deals focussing on solutions. It is also believed that given the geography of India and the vast population, the country is in a good position to attract more investors.

Foreign investment in real estate is also up after a prolonged lull. From Rs 727 crore in 2015-16 and Rs 703 crore in 2016-17, the Department of Industrial Policy and Promotion has maintained that in 2017 (up to December), foreign investments into real estate amounted to Rs 2,453 crore. This has been possible, the government says owing to the Real Estate Law, demonetisation, insolvency law, crackdown on benami as also the Goods and Services Tax (GST). 

Even the affordable housing mission has brought in the attention of the names like GIC Singapore and CPPIB, elaborating fairly well the growth in such investments. 

Infrastructure to spur growth

Infrastructure may also prompt more jobs and growth as foreign investments look favourable to aid this says Shubikha Blikha, Director, Real Estate Management Institue (REMI). 

"The infrastructure sector is gradually gaining traction from foreign investors owed to the government's thrust and focus on real estate and infrastructure growth as a key point in the development agenda. To meet the aggressive target of the government, in line with the plans announced in the budget, PPP models will become extremely important to meet India's infrastructure development requirements. Large global pension funds, patient capital investors with a large corpus are allocating funds towards infrastructure projects in India with a focus on roads and renewable energy," she says.

"JICA in April agreed to provide Rs.6000 crores for the second tranche of the Mumbai Metro 3 project, the UK government has committed $700 million to invest in Indian infrastructure, Canada's largest pension fund CPPIB was one of the anchor investors for L&Ts Rs.3,200 crore road infrastructure investment trust. Thai companies have also suggested investing around Rs.3 billion in green and brownfield projects for energy, infrastructure, and metals. According to reports by Venture Intelligence and Mint, I Squared Capital, Edelweiss Infrastructure Yield Plus Fund, NHAI, IndiaInfravit, IDFC Alternatives (Infra Portfolio), ReNew Power are some of the top investments made in Indian infrastructure in 2018," Bilkha adds. 

Real estate, infrastructure and the jobs market have, in short, been beneficiaries of foreign attention and investment and this may soon translate into property demand.