THE NRI EYE: Gulf investors bullish on India

India is fast becoming a favoured investment destination not just for its own diaspora, but also for institutional investors from the Gulf region. The most attractive avenue for major Arab players seems to be real estate.

Investment pouring into India’s hot property market from the Gulf region have crossed the $35bn mark, says The Economic Times. The combined value of the various real estate projects being developed by Gulf-based real estate firms has touched $37 bn.

The Gulf’s oil-fuelled current account surplus will hit $227bn this year, according to the Institute of International Finance, and that money is looking for a home. With domestic real estate markets saturated and the west seen as increasingly hostile by some, Gulf investors are turning to India’s emerging property market.

Gulf investors know India well, explains Richard Dean in The Financial Times. The country’s financial centres are a short flight away and many of the professionals managing Gulf money are Indian expatriates. Their intention is to develop the projects in which India’s fast-emerging middle class will live and work.

So far the Reserve Bank of India (RBI), the country’s central bank, has restricted foreign investment in property, fearing that an influx of funds could stoke inflation. But the finance ministry worries that stalling investment could stunt India’s growth and the balance appears to be tipping in favour of allowing more money in.

Fuelling this growth are companies like Emaar MGF, which announced its plans to develop SEZs, residential projects, hotels and malls and hospitals in the country at an investment of $12bn. Earlier this year, leading real estate developer DLF tied up with Nakheel to develop two townships in the country at a cost of $10 bn.

Similarly, Dubai-based developer ETA Star Properties announced a month ago its plans to develop a $923m IT park at Chennai, taking the group’s total investment value in India to $4.35bn so far.

Global Asia Real Estate, Dubai Properties, the Signature group, the Palmon group are some of the names that have so far made firm commitments to invest in the local property market.
In yet another instance, the UAE-based Palmon group invested $9.5m in Mumbai’s BSEL tech park. It is scheduled to invest in other cities such as Bangalore and Hyderabad. BSEL Infrastructure has other projects in Maharashtra and Gujarat and recently got contracts worth $134m for developing shopping malls in Nagpur.

Meanwhile, Dubai-based asset management firm Signature group is learnt to be close to launching several real estate funds for investment in the UAE and India, totalling over $650 m.
Istithmar, the private equity arm of the Dubai government, is also bullish on making investments to expand its horizons in the hospitality sector and other infrastructure projects in India. The company holds a global real estate portfolio estimated at $7-$8bn. Also, it was in holding high talks to buy Asian property assets worth at least $250m and expects to enlarge its portfolio by this year’s end.

Institutions all over the Gulf have predicted a bright future for investments made in India.
Kuwait Investment Company (KIC), for instance, sees an increase in GCC investment into India in the next three years. According to data released by the company, a major part of the investment will see its way to Indian real estate.

For the past few years, Indian realty has been a common hunting ground for large institutional investors investing high values, a trend which is expected to shape further.

Gulf Finance House (GFH), a leading investment bank, and lead financial advisor to Energy City Qatar, plans to buy 600 acres in Navi Mumbai to set up India’s first integrated energy business district — Energy City India — with an investment of $2bn. The project will come up within a few kilometres of an upcoming international airport in Navi Mumbai.