[kkstarratings]Foreign investors are being cautious about the Indian real estate market because it fails to meet the global standards, says Sean Tompkins, global chief executive officer of UK-based Royal Institution of Chartered Surveyors (RICS).
According to a report in The Economic Times, Tompkins has said that since 2005 Indian realty has not delivered the promise of being an attractive investment destination.
The sector had witnessed close to $20 billion in investment between 2006 and 2009. Of this, only about $2-3 billion has been able to exit as yet, after remaining invested for six-long years.
Soaring land prices and buyers’ resistance to price increases have narrowed investors’ margins significantly. In an earlier article, it had been said that, PE firms that invested in the Indian realty in the 2006-08 boom years are looking to exit, but are unable to so with profitable returns.
Quoting sources, the report said heads were rolling at the top levels of these firms as a fallout of the failed investments. Soaring land prices and buyers’ resistance to price increases have narrowed investors’ margins significantly. While many PE funds have postponed their plans to exit investments due to lower returns a few cash-rich ones are treading cautiously and avoiding investing anywhere as valuations have dropped. According to Tompkins, to attract more investments it is imperative to create the right conditions to an investor comfortable.
For this, India should treat real estate and construction as a proper profession like in the West if it has to rise to global standards.
Alok Kumar Upadhayay
Real Estate Professional