Advertisement
The View | India’s real estate sector is poised to live up to its potential as reforms make headway
- India’s property sector pales in comparison to others in the region in terms of the volume of direct investment
- However, the depiction of India as a bit player in Asia’s commercial property market belies the potent forces transforming the country’s real estate industry
Reading Time:3 minutes
Why you can trust SCMP
A cursory glance at the league table of direct investment in Asia’s commercial property sector shows that India, the region’s second-largest economy, is nowhere to be seen. Last year, China and Japan accounted for 38 per cent of transaction volumes, while South Korea, Australia and Singapore together made up a further 47 per cent, according to JLL data.
The volume of direct investment – which excludes land and development sites, as well as different types of indirect investment – in India is so small compared with the most actively traded markets in the region that it is lumped together with transactions in other thinly traded markets in Asia.
Yet, the depiction of India as a bit player in Asia’s commercial property direct investment market belies the potent forces transforming the nation’s real estate industry. A confluence of factors – offshoring, investment in manufacturing and the digitisation of the economy – have led to what Morgan Stanley believes is a “once-in-a-generation shift and opportunity for companies and investors”.
Advertisement
During the past decade, India has implemented far-reaching economic and regulatory reforms that have laid the foundations for stronger and more sustainable growth. In 2017, it introduced a long-awaited goods and services tax, subsuming the nation’s plethora of regional and national levies into a single payment, creating a unified domestic market for the first time.
To encourage more firms and consumers to use the financial system, the government set up the “India Stack”: a national digital infrastructure underpinned by a biometric identity scheme for all Indians and a payments system linking people with banks and mobile money apps. The International Monetary Fund said the system’s “comprehensiveness has succeeded in building a more inclusive digital economy from the bottom up”.
Another key reform was the establishment of a regulatory regime for publicly traded real estate investment trusts (Reits) similar to those in mature markets. This led to the successful listing in 2019 of India’s first Reit by a joint venture between global private equity fund Blackstone and Bangalore developer Embassy Group.
Advertisement
Select Voice
Choose your listening speed
Get through articles 2x faster
1.25x
250 WPM
Slow
Average
Fast
1.25x