New’ international investors likely to invest in India

An interview with Sameer Mutreja, Director, Scapes Realty India 

What are the most fundamental changes in Indian real estate since the last investment cycle?

The markets have matured. There is a lot more information available online about projects and the retail customer is therefore much more savvy. P.E.s and financial institutions having burnt their fingers last time have become more cautious and do not look at investments with rose tinted glasses. Importantly with the new government in charge, there is a perception that the economy is picking up and the new policies will deliver a more sound economic platform.

How are ‘new’ international investors likely to invest in India? Blind pools, managed accounts, debt funds, equity investments?

While debt remains the preferred mode of investment, there is today a greater appetite to invest in equity especially if the developer has a strong track record. There are a number of international funds looking at income yielding assets due to the advent of the REIT regulation.

What will stimulate the recovery of the resi market in Delhi and Mumbai? And what are the likely timeframes?

Price correction is required to stimulate the market. New projects in Gurgaon launched at below market prices are seeing a good response. There are still a lot of people looking to invest in residential real estate, however the closure ratio from qualified leads to conversion is still very low. Increase in sales volume will result in more investor confidence in the market.

Suburbs of Mumbai are seeing improved sales volumes.

Outside of Delhi and Mumbai, which city and which sector are you most bullish about over the next 12 months?

I am bullish on Hyderabad residential and commercial real estate markets. I am also bullish about second homes markets and retirement homes & Overall commercial real estate is picking up. There is also a lot of action in the capital markets.

Which infrastructure projects in India are likely to have the most positive knock-on effects for real estate?

Immediate impact is likely to come from Make in India & uniform GST, which will encourage development of industrial parks and large warehousing spaces. In the medium term, the REIT regulation and “Housing for All by 2022” will positively impact the commercial and residential segments. In the longer run we should see a lot of impact from the SMART City initiatives and the initiative to revitalize 500 cities; especially in terms of infrastructure upgrades. 

GRI in association with The Property Times.in