India's realty sector is set for robust inflows of $4-5 billion from overseas investors in the next couple of years, with Bangalore, Delhi and Mumbai emerging as the favourites, global real estate consultancy giant Jones Lang LaSalle has said.
"The early foreign investors in India, who came in around 2006-07, did not have very good experience, partly because of their inexperience in doing business in India and partly because of global financial crisis," JLL Asia Pacific CEO Alastair Hughes said. "However, foreign investors are now looking with a renewed interest at India, given its still robust economic growth rate as that bodes well for good returns to their investments," Hughes said.
Hughes, who was here to participate in the World Economic Forum Annual Meeting, said foreign fund inflows were expected to pick up in the Indian realty sector going forward.
He added: "They (investors) are now looking much more closely at India to put in their funds into Indian real estate sector. They had come in between 2006-2007 and first half of 2008, but they completely went away in 2009 and have been mostly away since then.
"The overseas investors are now looking to come back and what they are looking for right now is good partners in India, because it is a difficult place to do real estate business because of various reasons."
Right now, many Indian developers and fund managers are seeking to get international money and that is much more likely to come in, Hughes said, adding that there is more international money today waiting to be invested in India than any of the last five years.
Overseas investors have invested USD 14 billion into the Indian real estate sector over the period from 2006 to 2012. In the last two years, foreign investment into Indian real estate has been around USD 1.2 billion per annum.
Around half of all transactions were invested in residential property, a quarter in the offices sector and the remaining quarter was split among the other sectors.
Regionally, half these investment come from US with rest coming from the Middle East, Singapore, the UK, Hong Kong and Germany, Hughes said.
Terming the next two years as much more promising, Hughes said that 2013 and 2014 will have a total of USD 4-5 billion come into the sector, mainly to buy income yielding SEZ assets at a capitalisation rate of 10.75 per cent.
"We expect interest from global and US investors to maintain.