They say, “When it pours, it pours heavy”. It is indeed pouring heavily in India. Apart from the torrential rains the FDI is also pouring into the country, which is expected to quadruple in the next seven years. Gone are the days when the government was reluctant in allowing foreign companies to enter the Indian market. These days India and China are branded as the best places to invest for at least another 25 years and no surprises foreign organizations are competing big time to be a part of this FDI spree. The latest participator is the housing finance leader HDFC. The proposal of HDFC to invest a staggering Rs 3240 crore ($720 mn) into the Indian real estate business has been given an affirmative nod by the Cabinet Committee on External Affairs.
India is currently holding the position, which was formerly held by the US (in the post war years) as the best place to invest, thanks to the burgeoning economy and scrupulous economic planning. The real estate market of the country deserves a special mention, which is expected to grow from the current $12 bn market position to an Himalayan $90 bn in the next decade, courtesy Merrill Lynch. May be that will be an eye opener for those who wonder at the reason behind giants Farallon Capital Management, Morgan Stanley, Merrill Lynch and GE Commercial Finance Real Estate craving to dominate the Indian real estate space, needless to mention the local players. Now HDFC has forayed into the market by registering India Offshore Real Estate Investments, a fund raising company in Maurtius, which will invest in the Indian real estate. It has invited International Banks, Financial Institutions and high network Individuals to invest in the fund for a minimum period of three years.
This investment plan of HDFC has direct implications on
1) Its own revenue
2) The “home country” economy and
3) The market capitalization of local players
HDFC has made many smart moves in the past, joining hands with SBI, being one such and this investment plan is another strategic move, every economic pundit would say. The Indian government has signed a treaty not to tax the Mauritius investors, which will directly benefit HDFC. The stock value has already increased by 3.07% in BSE and the future looks really rosy for the organization.
The liberalization and the globalization binge has benefited the country largely with its economy growing at a breakneck speed. This approval by CCEA will attract other international players to pour in investments and thereby adding to the FDI revenue. It’s a win-win situation and surely India would cash in by making use of these opportunities.
The real problem is for the Indian players who with their already fragile investment now should meet this external pressure from the foreign investors as well. If only they stand tall in this competition, it would make the market positions more exciting and the investors more interested. Companies like UB group of Vijay Mallaya have the financial cushion and they can offer stiff challenge to HDFC and only time will decide the winner.
India is currently holding the position, which was formerly held by the US (in the post war years) as the best place to invest, thanks to the burgeoning economy and scrupulous economic planning. The real estate market of the country deserves a special mention, which is expected to grow from the current $12 bn market position to an Himalayan $90 bn in the next decade, courtesy Merrill Lynch. May be that will be an eye opener for those who wonder at the reason behind giants Farallon Capital Management, Morgan Stanley, Merrill Lynch and GE Commercial Finance Real Estate craving to dominate the Indian real estate space, needless to mention the local players. Now HDFC has forayed into the market by registering India Offshore Real Estate Investments, a fund raising company in Maurtius, which will invest in the Indian real estate. It has invited International Banks, Financial Institutions and high network Individuals to invest in the fund for a minimum period of three years.
This investment plan of HDFC has direct implications on
1) Its own revenue
2) The “home country” economy and
3) The market capitalization of local players
HDFC has made many smart moves in the past, joining hands with SBI, being one such and this investment plan is another strategic move, every economic pundit would say. The Indian government has signed a treaty not to tax the Mauritius investors, which will directly benefit HDFC. The stock value has already increased by 3.07% in BSE and the future looks really rosy for the organization.
The liberalization and the globalization binge has benefited the country largely with its economy growing at a breakneck speed. This approval by CCEA will attract other international players to pour in investments and thereby adding to the FDI revenue. It’s a win-win situation and surely India would cash in by making use of these opportunities.
The real problem is for the Indian players who with their already fragile investment now should meet this external pressure from the foreign investors as well. If only they stand tall in this competition, it would make the market positions more exciting and the investors more interested. Companies like UB group of Vijay Mallaya have the financial cushion and they can offer stiff challenge to HDFC and only time will decide the winner.
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