Why do you think the interest in Indian real estate assets is so high? The residential market here has been flat for many years now?
We look at India as a vast country with huge potential. We entered the Indian market back in 1995, knowing that like any real estate market, it was going to have its real estate cycles and it is evident at the moment that the residential market in India is going through one of those cycles of many years of growth, historically. We are confident that combined with a developing economy, improving infrastructure and gradually improving wealth, the residential market will come back in due course.
Do you envisage that recent government initiatives can unlock the latent demand in the residential real estate space?
I am not an expert on the details of the residential market in India but I understand that the government has made certain commitments towards assisting the affordable sector which is to be acclaimed. I am sure that will be a helpful contribution to the residential market across India, going forward.
Fundamentally, the key structural shift that will be needed to ensure that the residential market in India comes back to vibrancy will be the ongoing improvement in the economy year on year, ongoing investment in infrastructure and gradual improvement in the country’s wealth.
How do you compare Indian commercial realty to global alternatives?
It would be fair to say that Indian real estate has entered the international market relatively recently and it is maturing. But you should have great confidence. There is a gathering momentum of interest across the globe from real estate investors. They are looking for new areas to invest in. They are looking for yield. They are looking for opportunities and I am certain that as the India property market matures and becomes more transparent, there will be more inward investments from global investors. I have little doubt in my mind that given the local demographics, given the momentum behind the economy, within 10 years time, we will look back and there would be a quantum shift in the amount of inward investment coming into India from different overseas interests.
How much yield do investors typically target via investment in India versus other developed markets?
It is impossible to generalise. Depending on the sector and the circumstances and the level of risk involved, the length of income, the security of that income. But it would be fair to say that there is at least a 200 bps gap between investments within the real estate environment and the general trends that you might see overseas. But that is really a guide. It very much depends on the sector, the length of income and the security of that income.
What are the trends that will impact the real estate market in India going ahead?
That is going to be a very exciting list. Fundamentally, India is like many countries in the world but particularly, India is going to see an ongoing urbanisation and that is going to put pressure on the infrastructure. So a), We have to see an ongoing commitment towards improving the infrastructure, enabling the cities to grow and linking the key cities and allowing distribution to occur more freely, point one.
As the India property market matures and becomes more transparent, there will be more inward investments from global investors.
b)We are going to see the ongoing growth of office markets across all the key cities. They have had a very vibrant two or three years and so far as I can gather, the sentiment so far particularly hearing today about the activity within Bangalore itself, there is going to be ongoing interest and activity within the office sector. Logistics, is going to be a market to watch. Retailing or e-tailing and internet fulfilment is capturing the world of real estate in most mature markets.
I am certain that India is going to be no exception in that regard and I would suggest that going forward, India is going to see a great deal of activity in logistics needs — both in terms of big distribution centres and the smaller centres for last- mile distribution.
Looking further forward, as the wealth of the country continues to build we will see much more interest in the real estate investors in areas like student property, healthcare, retirement living and of course, one of the great hidden jewels that India has got — a very vibrant tourist industry. The last goes hand in hand with a whole raft of leisure and hotel activities which require real estate as well.
So, while it is already an established sector, I believe that is another sector that we will see significant interest in from around the world and going forward.