Global realty flocks to Bangalore

Bangalore's realty market is on fire. It has begun to attract international builders and developers as a result of the sustained growth in the number of projects, technology adoption and space offtake during the past three years. Some of these companies might take a call by year-end.

Among those who have already taken a decision are Keppel Land and CapitalOne from Singapore, and Royal Indian Raj International Corporation of Canada. Total investments committed or that are in the pipeline in Bangalore in the last three to six months is around Rs 3,000-4,000 crore.

Keppel Land is making its foray into India through partnership with Puravankara and is investing $13 million. CapitalOne is going in for an integrated township.

Ceylinco from Sri Lanka is partnering Shriram Properties to develop projects worth Rs 120 crore. Royal Indian Raj International Corporation of Canada plans to develop property at a cost of $791 million.

"The forerunners coming in with huge investments are Singapore companies, Malaysian companies, people of Indian origin, those familiar with the property market and financial firms which have raised money to invest in India," said Anshuman Magazine, MD, CB Richard Ellis South Asia, an international property consultant.

The developers are attracted by the returns. "Investors are looking at a 25-35 per cent return on investment in four years, compared to six years internationally," said Mayank Saksena, land & investment services, Chesterton Meghraj, an international property consultant.

"Developers are cautious about entering the Indian property market but at the same time are aware that there is a huge earning potential in India," said Hemang Rawal of RECS Patners, a property consultancy company.

Also, with liberalisation and reforms actively underway, India is on the path to becoming a mature economy with growing demand for houses and strong consumer spending power. In fact, the demand for residential and commercial space in India is even bigger than several European countries put together.

"FDI in real estate will be more inclined towards setting up integrated townships (office, housing and entertainment combined into one) and technology parks (office space). Developers are going in for a larger scale than what is currently on," said Saksena.

Investors are going in for bigger projects as they give greater ballast, control over the project environment and help spread out infrastructure development costs.