The Indian Real Estate industry is on a roll be it in the country or outside. The sector has witnessed immense growth in the past couple of years. The phenomenal increase in the Real Estate demand and access to funds were the key drivers for propelling the Indian real estate market into an overdrive.India has attracted $3 billion worth of real estate stated by government official report of March 2007. This booming India real estate market is currently more expected to contribute for concerning $30 billion in the upcoming years. When evaluated to last year, real estate 2007 has gone doubled.

In the league of the most preferred property market among foreign investors globally, US has retained its top position, while China was ranked second followed by India, a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE) said.

China moved to the second place, garnering 21.4 per cent votes and displacing India in the process, which was preferred only by 16.7 per cent of the respondents favouring the country as the most fancied place for real estate investment.

In 2006, China got 14.6 per cent votes while India had 18 per cent and was ranked in the second position.
One of the significant findings that cannot be overlooked is the jump in investors’ confidence in China. For the second time in three years, China has been voted as the country offering the second best chance for capital appreciation after the US.

Interestingly, the United States, whose economy continues to be bogged down by the subprime crisis and faces the threat of a recession, still managed to retain the the 'most preferred destination' tag for real estate investment.The annual survey respondents included nearly 200 members of the association and was conducted in the fourth quarter of 2007, after the credit crunch and sub-prime mortgage crisis.

Going forward, we expect the Indian real estate market to witness greater M&A activity driven by consolidation and the growing maturity of the market.

Those foreign nationals who are eyeing the booming property market in Goa should better do a reality check. Against the backdrop of cases of foreign land mafia and drug cartels buying real estate in Goa, the state government on, March 14^th 2008, banned foreigners from purchasing properties.

The government would make a serious attempt to incorporate the changes in Section 22 of the The Registration Act, 1908 during the budget session beginning March 24. Post-amendment, sub-registrars will be vested with the authority to scrutinize the credentials of the buyer and also the source of his/her money. All documents submitted by a foreigner will also be vetted by the Goa police and the home department. If found questionable, the sub-registrar concerned will have the powers to revoke such a sale deed. Earlier, there were no proper powers (given) to the registration authorities in Goa to checks whether the Reserve Bank of India had cleared a deal. Four other states, including West Bengal and Jharkhand, have already amended the Act.

With the state government unearthing 400-odd cases of sale of agricultural property to foreigners, the sale of land to the foreigners had become a contentious issue in Goa. The Goa government had constituted a committee a few months back, which studied all the proposals threadbare and referred 298 cases to the Union Enforcement Directorate for further action.

A sub-registrar can also deny the sale of commercial land to foreigners, if their ‘business plan’ is not found to be satisfactory. With this, the government hopes to curb drug trafficking mainly patronised by many foreigners here, who operate out of their ‘holiday homes’ and ‘shacks’ along the beaches across the state.

At present, sale of property to foreign nationals is permitted under the Foreign exchange Act (Fema) after a foreign national has spent more than 182 days in India in the preceding financial year. Land can be purchased for commercial purposes like setting up an industry or running a hotel. “Even if the foreigners enter into the partnership with an Indian and wants to buy property, RBI clearance is mandatory”.

Although, the residential property segment may not be performing well but the commercial property is certainly hitting the sky, says a report. Due to the corporate demand, the rentals have witnessed a rise of another 20% in the last three months. Indeed, the report claims the rentals to see a jump of 10-20% in very near future. This is because of the ongoing demand that continues to outstrip supply.

Usually individual investors, given the budget constraint, look for strategically placed bargain corners so that eventually they can attract good tenant or can even sell or lease to a brand looking for more space. The current trend sees individuals preferring mid and small-sized properties over the bigger ones as these are easier to rent out and always in demand. Developers feel that investing in such commercial retail properties, which started a couple of years ago, has now gained momentum due to a number of reasons. The advent of malls started off this trend which has now picked up as a few banks have started disbursing loans for these properties. This coupled with a boom in organized retailing, entry of foreign brands and rapid expansion of Indian brands has given it a further impetus.

There are various advantages that accrue to commercial investments vis-a-vis residential, which makes such investments a profitable deal. Capital appreciation as well as a steady income source via monthly rentals with yields of 12-14% stands in its favour. Moreover, the various options that have sprung up in retail have also played an integral role in generating high awareness levels.

Capital values are higher in retail spaces, they represent larger investments and a significant component of self-funding of upto 30-40% is required. This stands in contrast to residential properties which need only 5-10%. Despite this the rising boom in the retail sector has ensured excellent growth opportunities for individuals, thus making them turn attention to commercial retail as a viable investment avenue. Real estate developers in Mumbai plan to convert their not-so-successful retail malls into commercial office buildings due to high demand for office space from the IT/ ITES, financial services and telecom sectors. India had never seen demand for commercial property with such large floor plates.

Individuals are no longer eyeing only residential properties as a lucrative investment opportunity. Rather, it is commercial retail space that has now become hot property. We hear this often: “What’s the smarter move? Residential or commercial investment property?” It should come as no surprise that there isn’t a one-word answer to this question. You’ll arrive at your best choice – the one that maximizes your chances for success – by working through a decision process that includes some “global” issues, some local and some that are entirely personal.

The biggest land deal of the country took place in Noida ,a consortium led by Delhi-based Business parks and Town planners(BPTP) bagged a 95 acre commercial plot in Noida sector 94 for a mind boggling Rs 5006 crore from the Noida authority. According to a Noida authority spokesman, the permitted floor area ratio for development of the site will only be two. Only an area of 8.2 million sq ft will be allowed to develop. At this rate, the per sq ft construction right has cost BPTP a whopping Rs 6,100.

According to an official communication, the New Okhla Industrial Development Authority (NOIDA) floated auction bids for the plot in February 2008. It received four bids and March 03, 2008, the bids were assigned to a consultant to study the technical feasibility and financial viability of the bids.

The consultant submitted its report to the authority in which one of the bidders Ansal (API) was disqualified. The remaining three bidders - Omaxe, DLF and BPTP - were qualified.

The commercial complex is strategically located close to Delhi. It will be around 16 km from Connaught Place and around 10 km from south Delhi via the DND flyover.

According to Kabul Chawla, chief of Business Parks and Town Planners {BPTP}, a company engaged in developing various projects mainly in & around the national capital region (NCR), “We will ensure that this become the country’s most prestigious commercial complex. And, we are already in touch with planners and consultants like Norman Foster, for hotels, commercial complexes and financial hubs.”

The astronomical amount paid for the site is a clear indication that, in terms of sentiment, there is no downturn in the real estate sector .It also points to Noida emerging as an alternative to Delhi and Gurgaon for office space. With the airport coming up, the expressway, and all the infrastructure development happening in the backdrop of the common wealth games to be held here, Noida and Greater Noida are sought after real estate destination. At present, office rentals in Delhi’s high class areas range between Rs 200 to Rs 350 per sq ft. In Gurgaon, it varies between Rs 80 and Rs 120 per sq ft. As against this, rentals in Noida are in the range of 40-60 per sq ft. This has also made Noida an attractive destination for commercial space in NCR. In the previous biggest land deal in Noida, Unitech had walked off with an approximately 340-avre residential plot for Rs 1,582.83 crore.