Role of Financial Institutions In The Real Estate Boom In India

Buying your dream house is no longer a distant dream from the past. The million dollar dream is no longer a wishful thinking for 30-somethings in India! Thanks to the financial institutions in India and those who have brought this baby a step close to home and made finance in India a lot easier.

According to a top global consulting Company in the real estate, Knight Frank, India ranks 5th in the list of 30 emerging retail markets as far as commercial real estate is concerned. It's predicted to pick up at 20% growth rate by the end of the decade.

This boom has attracted many foreign investors and venture capitalists all around the globe and within the country. For namesake we have Morgan Stanley investing $68 million in residential projects and Vancouver-based RIRIC considering an investment of $2.9 billion! The competition is intense in NCR areas in Delhi like Gurgaon where DLF Universal is developing the biggest mall in the world, with an area of 4 million sq. ft.

HDFC pioneered in the financing of house loans. Financial assistance extends to corporates, individuals and real estate property builders and developers, training and consultancy services in this regard. The role of this bank has been legendary in recognizing the potential for growth in India's realty sector.

HDFC has diversified its role in the international funding for NRI s and foreign builders willing to invest in India. HDFC launched HDFC Property Fund in association with SBI. The fund's initial scheme is called HI-REF for domestic investors targeting rs.750 crores.

The scheme targets banks, insurance companies, corporates and high net worth individuals ready for investment. HI-REF will target companies mainly in these 3 categories:

Projects which are complete Projects in the developmental stage Projects in the planning stage

ICICI, India's largest private sector bank has also brought forth Integrated Real Estate Services through which individuals can capitalize the boom in real estate India. The services offered in this context have been in three-folds:

Transaction: Buying, selling, valuation, leasing, tenant and property search to achieve one's investment objective. Advisory: Specializing in market research, and analysis, location preference analysis, entry strategy, sector specific research, portfolio advice, investment analysis, business planning and property valuation. Funding: Providing bank loans at low interest rates

In order to avoid the crisis that was faced back in 1997 in Thailand and Indonesia, RBI has made certain security policies for these private banks to withstand the rising competition in the real estate business in India.

The future will lure you away when you consider entry of several investment bankers like Morgan Stanley, Hinduja group etc. According to PricewaterhouseCoopers Indian real estate is about to witness a major capital inflow of $7 to$8 billion over the next 18 to 30 months. Estimated returns will be 12% to 15% compared to 3% to 4% in USA. Any plans to get started?