Ameek Ponda, Abhijit Malkani, Dinesh Hemdev, Robert Corace and Jean-Claude Goldenstein recently spoke about the real estate boom in India as part of the panel organized by India Business Journal on “Expanding in India” at the Newton Marriott. According to J.C. Goldenstein, Managing Director of Global Solutions, NAI Global, the global arm of real estate firm NAI Hunneman Commercial, US has a GDP of $12,379B, Growth Rate of 3.5% and Foreign Direct Investment of $100+B. By comparison, India has a GDP of $691B, Growth Rate of 6.2% and FDI of $5.4B. With a population of over 500M people less than 25 years, large talent pool, entrepreneurial spirit, and pro business policy, the real estate industry is surging.

“The real estate market is valued at $50B and is growing at 25%/year. The total demand over the next three years will exceed 85M square feet besides 400M sf absorption for IT parks,” said Malkani, Regional Director-Indian Operations for NAI Global. The areas for investment include IT Parks, Infrastructure, Residential Townships, Hospitality Sector, Single Brand Retail and Special Economic Zones, which permits up to 100% investments in most manufacturing related activities. Most of the current investments are from Canada, Singapore, Dubai, Malaysia and Indonesia. Even though there are challenges related to fragmented market, slow legal system, lack of information and benchmarks, title clearance and insurance and local expertise for large projects, the laws are changing rapidly and should not deter one, said Malkani.  

Malls are growing at an exponential rate. There are currently less than 10 malls in operation but plans for more than 350 are underway. The hotspots for real estates are Bangalore with retail rental rates around $24/sqm/mo, Chennai ($19), Hyderabad ($24), Kolkata ($33), Noida, Gurgaon, and Indore.

Robert Corace, CEO of VMOplus, stressed the importance of investigating organization management and infrastructure before investing in India. Some of the options include partnership, acquisition, offshore captive operation, bundling and collaboration. Each option has different risk, investment requirements and opportunity to realize value.

Ameek Ponda, Partner and Co-Director of Sullivan & Worcester's Tax Department in Boston, MA gave an overview of the cross border deals, which typically require more time and expense and has a much higher probability of going bust. Whereas, “Everything is forbidden, unless it is permitted” in US, it is “Everything is permitted, unless it is forbidden” in India. Finally, it is important to consider the location of the registered business to take advantage of various tax treaties, such as the one between India and Mauritius.

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