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November 30, 2006

Global Real Estate Hotspots

Knowledge@Wharton has an article based on a panel discussion on destinations for global real estate investors. According to the panel, emerging real estate markets in India and China along with recovering property industries in Germany and Japan, are the most attractive.
(Wharton real estate professor Peter Linneman) described panelist Surendra Hiranandani, managing director and founder of the Hiranandani Group in Mumbai, as extremely popular these days with the hordes of real estate investors trekking to India to investigate its hot property market. "There's an image that, in India, the streets are paved with gold. What's the reality?" Linneman asked.

According to Hiranandani, the Indian economy only began to open up in 1991 compared to China, where free-market reforms began to take hold in 1979. The effects of those changes are just now beginning to become evident in India. He also noted that the capital coming into India is generating greater transparency in business. "When capital is scarce, people find nefarious ways of raising it. The availability of capital automatically makes it more transparent."

Meanwhile, Hiranandani said, a new generation in India is open to free-market reforms. He pointed out that Bill Gates displaced Mahatma Gandhi as the most respected person among Indians in a recent poll. In addition, India is a young country, with an average age of just 24 and vast potential to grow. "There is a huge supply gap. It's definitely an underexploited market." He said the best opportunities are in residential and hospitality development. Large Singapore-based firms have been building office developments, which means that sector may be overbuilt.

Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.