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A New Lease Of Life For Real Estate In India - And Pakistan

24/12/2015 8:11 AM IST | Updated 15/07/2016 8:25 AM IST
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A Caterpillar Inc. digger operates at a construction site next to Creek Vista apartments, background, in Karachi, Pakistan on Sunday, June 28, 2015. The construction boom also marks the nation's emergence as a frontier market after Prime Minister Nawaz Sharif averted a balance-of-payments crisis with help from the International Monetary Fund and resumed selling stakes in state companies. Photographer: Asim Hafeez/Bloomberg via Getty Images

India appears to be hitting its stride in the real estate sector again, following an extensively wretched period of overpriced properties, unnecessary delays in developments and withdrawal of foreign investment.

According to reports, property firms in the country have received more than $910 million in the past few months from Wall Street leaders like Goldman Sachs, Blackstone and Warburg Pincus.

With the effects of the global financial crisis gradually fading and investors bettering their calculations on partnerships and new projects as a result, the country's realty sector seems to be regaining the trust that once allowed it to burdgeon. While the new government actively mediates transparency and order in the sector, reduced interest rates on home loans are the cherry on top.

The bigger picture

However, India is not the only South Asian country that stands on the cusp of success in the property sector. Pakistan, its western neighbour, is not far behind in the race for attracting international investment.

India is not the only South Asian country that stands on the cusp of success in the property sector. Pakistan, its western neighbour, is not far behind...

With China investing $46 billion to develop an inter-regional economic corridor in Pakistan, the country is poised for higher and profitable stakes in the property market. The largest deep sea port of the world -- Gwadar -- in the south-west of Pakistan, is rapidly developing into an economic powerhouse and the centre for regional logistics network.

Leading property developers like Emaar Properties and the Al Ghurair Group have also lined up investments to develop modern, master-planned gated communities in Pakistan's major cities.

Pakistan's real estate sector is not just catching up on the development front, but avenues facilitating property activity and transactions in the country are also blooming with the inflow of foreign capital.

A more flexible policy that promotes Foreign Direct Investment (FDI) is also playing a big part in the rising fortunes of Pakistan, which received $9.5 million in foreign investment in the construction sector in the first two months of fiscal year 2015-16. The total FDI in the said period was $119.3 million.

Bring it on

While Pakistan may be upping the ante on attracting foreign investment, India's journey towards affluence has already started.

With home loans on offer at low interest rates, India is already seeing a heightened interest from a large number of NRIs investing in property back home. E-commerce buzzing its way into the Indian economy through a thriving IT sector is also contributing to better times for the country's real estate sector.

Google has estimated that the Indian e-tailing market will reach $15 billion by 2016, translating to more than 100 million buyers on the digital front.

Property buyers and sellers are already reaping the benefits of advancement in the IT industry through online property portals like 99acres and Commonfloor. Similarly, an online real estate portal of Pakistan, Zameen.com, recently closed a $9 million investment deal with three international companies, including Vostok New Ventures.

Offering a quick digital view of a large number of properties to buyers, sellers and renters, this new trend in the world of real estate is also helping organise property records and transactions across India. The transformation from a manual to a digital mode of business in real estate has made sure the industry grows from strength to strength without the traditional qualms associated with the sector.

The continued inflow of FDI into Indian real estate showcases the confidence NRIs and other international investors place in the sector, which is becoming more and more transparent with the incorporation of technology and general improvement in regulations.

With prices now stabilising, Indian real estate is set on a path of progress for years to come and will continue to provide lucrative returns for those who seek them.

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