Japanese, Chinese Realtors Bullish on Indian Real Estate
With the allowing of 100 per cent foreign direct investment (FDI) into the Indian real estate industry and India’s rising stature amongst the global investment community, the country has become a hot favourite for developers from Japan and China, says a report by global property consultant JLL.
Among the noted deals, Dalian Wanda Group, one of China’s most prominent developers signed a memorandum of understanding (MoU) earlier this year with the Haryana government to develop ‘Wanda Industrial New City’ entailing an investment of $10 billion over a period of 10 years.
An MoU signed between China Fortune Land Development Company Private Limited (CFLD) and Haryana state will see large format industrial parks come up in the state. Gezhouba, another prominent Chinese construction company, has in-principle agreed to invest Rs 10,000 crore in irrigation projects in Telangana state.
Anuj Puri, JLL India chairman and country head, said, “With China experiencing a slowdown in their own economy, the developers there will get an opportunity to benefit from India’s growth story. The Wanda investment will be one of its biggest, so far. It is also bigger than most deals that other Chinese companies investing abroad carried out in 2015.”
Foreign developers are also going to look at partnering with their Indian counterparts. Interestingly, large residential projects are of particular interest to other Chinese developers. It remains to be seen if commercial asset class also gets on their radar in the near future.
Increased participation by foreign players is expected to help in the development of quality projects, which will benefit end-users and simultaneously create opportunities for Indian investors too.
Wanda plans to invest $10 billion in the next 10 years to construct industrial townships, retail and residential developments.
According to media reports, construction of the phase-I of ‘Wanda Industrial New City’ is likely to begin in 2016 and it will be spread over 1,300 hectares. It will comprise an industrial park that will house companies from various sectors such as software, automotive manufacturing, machinery, health care, education and other industries. The first phase is anticipated to be completed in the next 3-5 years.
Japanese and Chinese private equity investors are also looking at entering Indian real estate sector. Japanese developers are keen to explore strategic partnerships and enter into joint ventures with Indian builders and are particularly interested in industrial projects.
There is likely to be an inflow of at least $2 billion in investments from Japan into the Indian real estate market over the next three years.
Interestingly, the RICS-JLL Survey this January had shown that 62 per cent of the respondents – all seasoned real estate investors – felt that institutions from Japan and China could come knocking to the Indian real estate market in 2016.