The real estate industry has emerged as one of the most happening industries in the country in the recent times. The industry got a major boost when government permitted 100% FDI in the infrastructure sector. Many foreign companies have since joined hands with domestic players to exploit the huge growth potential of the industry. MNCs like American International Group Inc., High Point Rendel of UK, Edsaw-US, Japan’s Kikken Sekkel, Lee Kim Tah Holdings and Cesma International from Singapore have shown keen interest in the sector.
Recently, Dubai-based Emmar Properties, the largest listed real estate developer in the world, joined hands with Delhi-based MGF Developments with an investment of US$500 million, resulting in India’s largest FDI in real estate sector. Total FDI inflow in the country in FY 2006 was $7.5 billion. Introduction on real estate venture capital funds in the country and change in FDI policy related to the development of Special Economic Zones (SEZs) is another reason for the spurt in the industry. Private sector biggies like reliance Industries Ltd. have proposed to spend Rs. 50,00 cr on its various projects. Alongside, Nokia, M&M and ONGC are investing and pouring huge amounts in building infrastructure for commercial and industrial use. Cashing in on realty boom, Gammon India ltd. comes out triumphant with net sales of Rs. 1429.36 cr. The company also significantly boosted its profits, which was up 173.26%, during the fiscal. With upswing at the top line and strong growth at the bottom line are Punj Lloyd, B L Kashayp & Sons Ltd. and Simplex Infrastructure Ltd., with net sales of Rs.1,407.33 cr and Rs.1334.62 cr, respectively.
These increasing investments in infrastructure and the rising demand for commercial as well as housing units augur well for the industry, in general. However, things such as rising input costs and continuation of housing tax incentives would be things to watch out for industry players.
— Aniket Arekar, Research Manager