What is your overall feel of the Indian real estate outlook in 2015-2016?
There is a definite optimism about the long term prospects for India. That is somewhat counterbalanced by significant frustrations that the macro story isn’t yet translating into on-the-ground progress in the real estate sector. The residential market has stagnated and needs a combination of the forthcoming interest rate change and an increased consumer confidence to start moving again. Most expect this to take 12 months to get going. Commercial real estate, although a far smaller piece of the pie, is very buoyant and there is particularly bullish feeling around the office market. The macro story is certainly helping this.
What are your thoughts on the “Modi 2020 vision” and what impact will it have on real estate?
The 2020 Vision is more about the bigger picture – Modi’s ‘New Age India’. To me it is a clear, ambitious and hugely admirable manifesto. I urge anyone who hasn’t watched Mod’s Inaugural Address at the Economic Times Global Business Summit to do so in its entirely. Modi’s primary objective is to turn the ideology into action by getting India moving; economy, infrastructure and power. Real estate is not explicitly addressed in this, but I’d expect the sector to feel the benefits of this later down the track.
What do you think about international investors current view of the Indian real estate market?
It’s varied. There are some sovereign wealth funds that set up in India and have been there through thick and thin. There are also private equity houses who did the same. In recent years they have created debt platforms, though that window is arguably about to close. In 2015 we’ve seen interest from global pensions, sovereign wealth funds and private equity to explore opportunities in India in the next 12 months. That might not result in deals overnight but the interest is certainly there. The challenge, of course, is that India is still tough to sell to investment committees. Not because of the fundamentals of the economy of the future of the country, but that many investors got burned in the last cycle.
Is India different now to the last cycle?
Absolutely, the market has matured. The biggest perceived risk in India has always been ‘partner risk’- but now the developers – the big boys at least – have track records to call upon. Investors feel more comfortable investing directly into projects than they did before, though this is still a limited group. The fund managers in India are also now operating separate accounts rather than just blind pools, which helps investors who seek greater control. The market has also progressed significantly in terms of overall transparency and that is expected to continue with Modi’s reforms.
How important do you think REITs will play in the Indian real estate market in the coming years?
The jury is out. Many that I’ve spoken with believe that it will created the much needed market depth. Others are more sceptical. The real question is – what do global REIT investors want to see in order to invest in Indian REITs? What’s the criteria? Does India fit? That will be a very interesting conversation.
In a nutshell, what is India GRI?
India GRI closed-door meeting of 1.5 days for senior investors, lenders and developers active – and soon to be active – in Indian real estate.
What is the key characteristics that differentiate India GRI from other events?
India GRI is unique. Everyone present is senior, engaged and welcome to participate equally. We believe that conversations and debates are a better way of establishing relationships than presentations and panels. We don’t have speakers. Instead, we have simultaneous small group discussions on all major asset classes, markets and issues in India.
Who will come to India GRI?
The core constituents are Indian investors, developers and lenders. They are joined by global funds active in India, and those who are interested in India. We also welcome major hotel groups, corporate tenants and retailers.
What will be different in this India GRI in comparison to previous edition?
For a start, India is back on the global investor radar and one would expect that the international participation will increase accordingly. There are certainly positive signs towards this. This year, we have also put a lot more time into the development of the program. We’ve developed it from two angles; one side in collaboration with the Indian market, and the other in collaboration with international investors. This has been greeted with a lot of positive feedback.
As an attendee what would I look to get out of India GRI?
You should expect to connect with investors, lenders and developers active and interested in India. From this, you should take away new business connections and friendships.