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According to the real estate experts, the prospect of getting
superior returns in the U.S combined with less asset price distort the
risk-reward balance in opposition to upcoming realty markets of India.
Thus, there is a high probability of foreign investors avoiding the
Indian real estate market.
According to another expert retardation
of general growth and low interest rates have served as a double blow
to the real estate developers even as the alleged risk-reward ratio for
India is going downhill. For instance, the pension funds in US have the
opportunity to invest in India or other markets. They opt for other
option because of better level of available information. According to
another expert in real estate, there is no developmental liability in
other markets as these are existing properties. Further, the absence of
political or currency risk and the prospect of approximately 18-20%
returns in the US make it very attractive for investment and, they are
not particularly eyeing for additional 5% they may gain coming to
India.Considering the elevated risk that the investors have to take in
India, this minor extra return seems to be rather inadequate.
This
might be an early phase but, for investments, it may result in
investments decisions against Indian market. Investors have plenty of
doubts and asking many questions and deals are getting cancelled.
Term-sheets are deferred. Citi Venture and AIG backed out of a proposed
investment of Rs 1500 crore to be made in Mumbai-based real estate
developer Akruti City in April. There is a hold-up or delay because of
slow decision-making by the PE majors. According to the experts, this is
happening because PE majors are not sure. However, developers are
commencing to recognize the actuality and coming with better terms and
condition. This is clear from the financing terms that they are
accommodating nowadays with the growing demand of economy.
