Demand for residential development will continue to remain unabated, but the requirement of real estate by retail industry over the next five years and even thereafter will provide a major thrust to the property market in India, said CB Richard Ellis’ global president Robert E Sulentic.
“There is going to be a fairly rapid evolution of retail real estate. Organised retail is going to become more and more prominent here. There is clearly going to be a huge amount of residential development too. You will see a lot of rapidly-changing trends in the retail real estate,” Sulentic said.
According to him, the worst in the global property market is over and growth will resume now as most of the indicators, such gross domestic product growth and employment rates across countries, are moving up. However, he also accepts that growth and peaks witnessed in 2007 may not be repeated very often.
In the backdrop of this expected growth in the Indian realty market, the consultancy firm is now looking at expanding its operations and increasing its employee strength by at least 50% in the next three years.
“India is one of the big focus areas for us. We are going to invest here to grow further. I wouldn’t be surprised if the number of employees moves over 3,000 in the next three years,” he said.
Being a focus market for CBRE’s future growth, the consultancy firm currently has around 2,000 employees in India, of the total 6,550 across the Asia Pacific region that contributes around 15% to its annual revenue.
Sulentic feels that the policy framework in the Indian property market needs to be strengthened in order to attract more foreign funds. “I think, it needs to be made more efficient. From everything I have heard and seen, there is still lack of transparency, it is still complicated. It’s still hard for foreign investors to access the property market here,” he said.
According to him, the mechanisms for foreign investment to enter into the Indian realty market are somewhat limited and these options can be enhanced further. Currently, up to 100% FDI is allowed in real estate projects in India via the automatic route with conditions including a three-year lock-in on investments. The investor is also expected to bring in at least $5 million in the project, which is required to be of built-up size of at least 50,000 square metre, or 10 acres, of land in a plotted scheme.
Sulentic accepts that restricting the flow of funds into the Indian realty market has worked in its favour during the global property meltdown in 2008 and 2009. “In the long term, it will be easier for funds to flow into and out of India. But that’s just a guess on technical trend,” he said.
