The Hindu Business Line : `FDI in realty sector will add value'

"Today it is easy to build small and large buildings. But can we build economically viable buildings? A foreign investor can help do this," according to Mr Yash Gupta, Managing Director, HINES, an international real estate firm.

Addressing the `Estate South 2006', a seminar organised by the Confederation of Indian Industry (CII) on `Emerging Trends and Opportunities in South India's Real Estate Sector,' he said besides bringing international design and engineering concepts, a foreign investor also optimises business through economic and process efficiency.

He cited the Haryana Government's plan to build 22 malls on one road in Gurgaon as economically unviable and one that could have been avoided in the planning stage itself.

Through case studies he explained how companies could add value even in modest projects. `Embassy House', an apartment complex built by HINES in Beijing paid attention to detail, such as building a flexible kitchen to suit an expat's dry cooking as well as a native's wet cooking. Office complex `Torre Almirante' in Rio de Janeiro recycled all construction trash to produce about five lakh bricks.

Mr Prakash Gurbaxani, Chief Executive Officer, TSI Ventures (India) Private Ltd, said FDI would create entrepreneurial opportunities. "FDI provides incubation support and venture capital options for young entrepreneurs," he said.

The session also discussed why foreign investors were apprehensive of entering India. "Most Indian companies have dramatic scale-up plans which are seen as unreasonable by the foreign investor," said Mr Niten Malhan, Vice-President, Warburg Pincus India Private Ltd.

Lack of market data on real estate deals, lack of transparency in land pricing and lack of investment options were other issues that lead to delayed FDI, he said.

He said these delays were part of the normal gestation period that foreign investors took before entering any sector in the world. To speed up FDI deals he suggested Indian companies align their interests with that of the foreign investor.

"Reviewing ownership of the project through the development period is a good way to ensure that all partners face the same risks."

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