India-Real-Estate.org

Despite the ‘developing nation’ tag, India is one of the leading property markets worldwide and property builders and developers across the country provide a back bone for this development.

The aim of India Real Estate.org is to help Indian real estate investors across the globe, in learning about good opportunities, and reliable builders/developers. Indian companies are more resilient than ever to a global downturn these days, with lower borrowing costs and healthier debt-equity ratios.

Now coming to the point….Mumbai real estate is among the most expensive in the world - more than that of Tokyo or New York - and there is no shortage of those who can afford to pay. The city also attracts millions of low wage workers every year, and there are ever-expanding slums that house more than half of the city’s population.

Mumbai real estate is a multi-billion dollar market on a daily/weekly trading basis. In addition to sea view penthouses on Marine Drive, Worli, Juhu etc, there are luxurious duplexes across the city….with many new residential projects to fully furnished offices and ‘built-to-suit’ commercial spaces including upscale multi-family apartment communities.

Some analysts say that Mumbai real estate has started seeing a slide in property prices; others may witness the decline gradually. Some experts believe that over the next three to six months, the liquidity crunch will have its full impact on property prices.

Market estimates say many people who had purchased property for investment purposes had a big exposure to the equity market, which is currently 25% down from its high levels in Dec 2007. This means, the turmoil in the stock market may lead to drying up of available free cash, leading to default in paying installments.

That said, Mumbai real estate market has pockets of attractive opportunities even at high P/E levels. Investors have many good reasons to invest in Mumbai property market. Mumbai is the India’s business capital, and the most populous city of India.

Investors and HNIs have been investing in various pre-leased properties having insurance, banking, IT/ ITES, residential and retail sector occupants. Investors should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into an expert’s stock analysis or opinion.

Another interesting trend is the remodeling of commercial spaces to retail spaces. The property values for commercial spaces are touching skies and developers are finding it difficult to sell their commercial/office property. Hence, many of them are positioning their property as retail space in a hope to find more takers.

Investors are targeting Navi Mumbai because the prices here are on the increase. It is a newly developed area just across the harbor.

Unitech, India’s second largest developer, was involved in two such land deals. It snapped up 1,750 acres in Vizag for Rs 3,350 crore last year and won 340 acres in Noida for Rs 1,582 crore in 2006, while India’s biggest real estate developer DLF clinched a 38-acre land deal in the national capital for Rs 1,675 crore. Unitech is expected to close FY08 with revenues of Rs 4,350 crore and a net profit of Rs 1,650 crore.

Developers are constructing properties with facilities and amenities at par with international standards. Yearly appreciation on commercial real estate market across the Indian metro ranges from 9 to 11%. So there are many opportunities there at all levels: residential and commercial real estate.

About the Author: Shankar AVSB of 7Avenues Private Equity, who is an investor in Indian Real Estate. He believes that Mumbai real estate presents great opportunities in both bullish and bearish market sentiments. He is based in London.