The India realty sector is set for higher growth in 2016 with Mumbai and Bengaluru continuing to be the most preferred investment points in terms of commercial office and mid-segment residential property asset classes
The proposed regulatory initiatives such as the relaxation of FDI rules in real estate and passage of real estate regulatory bill are seen to enhance investment in smaller projects.
Analysts affirm that overall Indian real estate market is heading for a steady revival in 2016, with over 70% of investors expecting improvement in sales in the next 12 months, said a research report by property consultant JLL India and Royal Institute of Chartered Surveyors (RICS), an accreditation body.
The report Peering Into 2016: Taking Pulse of Investor Preference says there is a spike in investor interest in the real estate market as around 43% of respondents saying that there are many growth opportunities emerging.
While Mumbai and Bengaluru will continue to be the most preferred destinations for investment, commercial office and mid-segment residential property will be the top two preferred asset classes by investors, the report said
“After relatively muted calendar years 2013 and 2014, private equity (PE) investors significantly increased their bets on the Indian real estate sector in 2015. This report examines the motivations and expectations of PE funds that are now actively ramping up their exposure to this sector,” said Ramesh Nair, Chief Operating Officer of JLL India.
He said a significant number of investors who participated in the survey believe that the refinancing theme is set to continue beyond the next 12 months.
The report said proposed regulatory initiatives such as the relaxation of FDI rules in real estate and passage of real estate regulatory bill will enhance investment in smaller projects and positively impact sentiment by boosting buyer confidence.
“Today there are several financing options available. Driven by the need to increase returns and a desire to diversify, investors’ interest in international property markets is once again on the rise and India definitely seems to be leading that interest,” said Devina Ghildial, RICS Managing Director.
The report said newer sources of capital from Japan and China are expected to enter the Indian real estate market in 2016 while pure equity investments are likely to make a comeback this year.