Chinese investors eye opportunities in real estate sector in India

Guangdong-based homebuilder Country Garden is flying Indian developers to China to showcase its project management skills that helps the company execute cost effective projects in record time. The company claims to have sold homes to 3 million buyers with its efforts to provide the highest value-to-price ratio globally. The Hong Kong stock exchange listed company plans to acquire at least one residential land parcel in 2017 as the Indian government pushes affordable housing projects by giving it infrastructure status as well as providing buyers interest subvention.

While the push for affordable housing has brought Country Garden to India, the Centre's Make in India initiative promoting industrial parks has brought Chinese giant Dalian Wanda, which plans to invest $10 billion in India in construction of five industrial theme parks, besides shopping malls. It is currently in negotiation with the Haryana government for an equity sharing deal for projects in the state. China Fortune Land Development (CFLD) is another Chinese real estate giant that plans to gain though the Make in India project.

"With regulatory environment improving with the RERA Act, India's real estate is expected to get interest from institutional investors from across the globe," says Nikhil Bhatia, MD & Co-head Capital Markets for CBRE in India.  Real Estate (Regulation & Development) Act, 2016 got implemented in several states on May 1, bringing a more transparent system to address customers’ grievances. Implementation in all states is expected to set in by 31 July- a time when all real estate projects are expected to be listed with the authorities.

This has brought confidence to customers who were earlier struggling with their complaints in consumer courts where judgments were quite delayed. This has also brought confidence to institutional investors who would have more effective regulator to enforce their rights.

"Earlier we have seen long term pension funds from Canada investing in the sector and now we are seeing Chinese developers and funds actively looking for opportunities. Given the opportunity we could also expect Japanese investors to get into this space in India soon," says Bhatia.

China’s Fosun International plans to invest $1 billion through a realty private equity platform. Japan’s Mitsubishi Group is also expected to get active in real estate investments in India.
 

“Chinese firms are entering Indian real estate at a time when the market in their own country has slowed down significantly,” says Rajeev Bairathi, executive director & head capital markets at Knight Frank (India). Now, with an improved regulatory environment they want to get into co-development models with local developers or invest through the private equity route.

“Chinese companies have strong project management capabilities which helps them execute real estate projects in record time. Indian real estate sector will benefit with their entry,” says Bairathi.