Indian Real Estate Rush Lures Foreign Investors

By: Propertiesmls

HONG KONG India will have at least 50 property-related initial public offerings in the next year as the real estate industry booms, according to Anish Jhaveri, the head of equity sales at HSBC Holdings in India.

"With the opening of the real estate sector, there's a lot of need for funds," Jhaveri said in a recent interview in Hong Kong. "The government has been giving very proactive support to the whole sector."

The real estate market in India is worth about $12 billion and is growing at about 30 percent a year, Ernst & Young said in a report last month commissioned by the Federation of Indian Chambers of Commerce and Industry. Rising incomes, easy financing and population growth are driving demand for housing and luring overseas investors.

"The appetite for real estate IPOs will be there," K.K. Mital, chief investment officer at Escorts Asset Management in New Delhi said a phone interview Friday. "The young work force is looking for real estate investment, and the financing is available - the banking system is supporting this growth."

Jhaveri said that venture capitalists and overseas investors were poised to invest over $5 billion in the Indian real estate sector, without providing more details. "People are seeking more clarity" on possible changes to property regulations before investing, he said.

His forecast takes into account the possibility that India could allow real estate investment trusts, or REITs, to invest in the nation's property industry. Still, of the 50 real estate related IPOs that he predicted would take place in the next year, he only expected a "small" number to be REITs.

In the past year, India had eight initial share offerings by engineering and construction companies, which raised $478 million, according to Bloomberg data. That compares with the six initial public offerings raising $304 million in the previous 12-month period.

Indian billionaire Kushal Pal Singh's real estate company, DLF Universal, is seeking to revive the biggest Indian share sale once regulators decide on a complaint by shareholders. The New Delhi-based company plans to submit offer documents to regulators, paving the way for an offering by early December, Saurabh Chawla, the finance vice president of DLF, said in a phone interview Friday.

India is short of 20 million housing units, according to a study by Housing Development Finance. That shortage will get worse, according to UBS analysts, citing the growing population and increasing affluence. Asia's fourth-largest economy grew 8.9 percent in the three months to June from a year earlier.

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