Joining hands with the local and national players, an increased number of foreign players are investing in large projects in India. The names of overseas investors include Vancouver-based Royal Indian Raj International Corporation (RIRIC) and Morgan Stanley Real Estate.

The year 2006 started on a promising note as the Government of India unlocked the construction and development sector in February and allowed 100 percent Foreign Direct Investment (FDI) under the 'automatic route' in order to encourage investment in the infrastructure sector. The relaxation of the FDI saw a rise in pulling more foreign companies towards India.

The recent explosion in the real estate sector is the outcome of a number of factors that have changed the socio-economic behavior of the country. India has witnessed a phenomenal development over the last two years with the emergence of high-class shopping malls combined with multiplexes, commercial spaces, restaurants and all other modern amenities, which is attracting entrepreneurs to set up shop here.

Realty Sets In

Gives better return on investment as well as utility of the space invested in Need to invest in real estate to expand business operations Self owned premises permit designing the infrastructure as per the owners need Real estate can be a separate revenue stream, by leasing it out to other corporate houses

Studies on this growing trend show that the number of malls in all the leading cities of India is due to an exponential growth rate. Similar progress has also been observed when buying commercial properties, as today's capitalists are more interested in owning properties rather than renting them.

The trend has also spread to the solution provider's community. Over the past one-year a number of SPs have started investing in purchasing their own premises.

The development of real estate has taken place mainly in two areas, retail/commercial and residential. Based on several market surveys experts have ranked India among the top ten in the list of 30 emerging retail markets and has predicted an impressive growth rate of 20 percent for the organized retail segment within the next five years.

Major developments have taken place in the metros with the rise of plush residential and trendy commercial projects. One of the key factors considered for this growth is the meteoric rise in the BPO sector over the past five years. The off shoring business is in fact now breaking geographical barriers and spreading to smaller cities too, indicating a rise in demand for office and residential space over the next few years. In fact, it is the rapid industrial growth that has overtaken the sub-continent, which is considered the main catalyst behind the substantial rise in the real estate market.

Investing in real estate
Keeping pace with the 'in' trend, some of the leading IT solution providers across the country feel that in the changing socio-economic scenario investing in realty is not a wise but rather an essential step. Mumbai-based Nitin Shah of Allied Digital Services believes that investing in real estates serves two vital purposes. While money is being invested in the right direction, space is also being utilized as per self-requirement.

"The rate of properties is increasing tremendously, therefore if anyone wants to earn good money, the best way is to invest into real estate. It will give you better return and also utility," commented Shah who has already bought a property, with plans to buy more in the pipeline.

Agreed Kolkata-based Milon Chakraborty of Syntech Group of Companies saying that according to him it is sensible for a man to invest in buying his own property rather than wasting the money paying rent and 'salamis'.

Two years after starting and more than five successful commercial and residential projects later, Chakraborty first tasted fortune. Now his next business venture after IT will be in real estate. A few months back he shifted his headquarters to one such complex built by his own construction company, in Salt Lake City. According to Chakraborty it will help him to utilize space according to his own requirements and also earn better returns.

Also dabbling in real estate purchasing is Ranjan Chopra of Delhi-based Team Computers. With presence in over 45 locations across India and an employee force of about 1,200,
the company needs more space to match their growth rate. For Chopra purchasing property in each location is not always viable, but for places with maximum operation, establishing self-owned premises is the best solution for him.

"A good working environment yields better productivity, which will result in better returns from business. In a rented office there are limitations. Where as if it is self owned we can design the infrastructure according to our needs," stated Chopra who has chalked out plans to invest around Rs 3 crore in real estate to establish self-owned offices in places like, Delhi, Himachal Pradesh and Goa.

Meanwhile Kolkata-based Mahesh Shah of Pecon Infotech and Bangalore-based Ravi Verdes of Frontier Business Systems too have jumped on the bandwagon. Shah invested in a property in Salt Lake City where he is creating infrastructure for a call center facility, he also purchased another plot of 15 acres near Rajarhat Township where he intends to build Pecon House.

"We are making a multi-storied property and will consolidate our entire business operation there in the next two years," informed Shah. Verdes on the other hand has short-listed a few plots, where he plans to build complexes tailor made as per his requirements.

Key trends of the day
As the competition is increasing, builders are going out of their way to be different and provide customers with innovative and tempting options. But according to all the solution providers investing in realty, especially for commercial usage, the two primary factors to watch out for are location and availability of quality manpower.

"To select any property the primary factor to look at is the area which should be centrally located, well connected and is future prospective. Also one should verify the history of the builder first and investment should be made into bigger projects with modern infrastructure facilities," briefed Chakraborty. Supporting his view Verdes added that parking should also be easily available. "In our type of work power situation is also a major factor, the area should be well connected by communication means."

"Cost is also a factor, it should be reasonable and of course the availability of a high quality of manpower," added Chopra. Elaborating a little on the cost factor Shah of Allied Digital Services mentioned that investment should be made in a calculative way, "For me it makes no sense to invest in a property which is located in a high value area. It is better to invest in upcoming areas. That way you save money because while buying the rates will be less, but after a few years as the area develops, the cost of the land will shoot up at an exponential rate."

To conclude, it can be said that realty is a reality that SPs are waking up to. The wiser ones have already sowed their seeds and for the latecomers this is the final wake up call. Its time to answer the call of the day as it is sensible to invest in self-owned premises rather squandering money on rent.

That's what the experts have to say! 

PIYALI GUHA

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