The Real Estate Regulatory Act is generating excitement for property in Hyderabad and in other tier 1 cities in the country. Already top global investors such as Goldman Sachs and the Blackstone Group among others have been investing in Indian realty over the past few years. Now as the effect of the RERA permeates across real estate in Hyderabad and other top domestic real estate markets, foreign investment is likely to quicken and to come from new global players eager to take advantage of the countries globally relatively attractive real estate market. The policy reforms pertaining to the RERA as well as the government’s decision allowing 100 foreign direct investments in construction allows foreign investors far greater confidence when investing in real estate projects in Hyderabad or another large metro city.
Already many significant foreign investors are gushing at the greater transparency brought about the RERA, according to one ranking, Indian cities have moved up by nearly 12 notches since 2012 when it comes to transparency in real estate among a list consisting of 109 countries. Not only is RERA likely to improve sentiment among middle class homebuyers looking for affordable housing in Hyderabad, but should also lead to an uptick in activity in the construction of luxury apartments in Hyderabad and other cities as global investors gain far greater transparency regarding upcoming developments and make decisions with greater information than they could in the past. There is expected to be a repeat of the record two billion dollars invested in Indian realty last year from foreign private equity funds, some of this money may likely flow into new projects in Hyderabad.
Furthermore, there is likely to be better news over the coming years for property in Hyderabad as well as for property in other tier one cities as the impact of RERA is more keenly felt. Since the current status of tier one cities in the country is labeled as “semitransparent” it does not lend them to be regarded with as great a sentiment as “transparent” markets elsewhere currently are; however with the passage of the RERA, real estate in tier one cities in India is expected to enjoy the latter status within 2 years leading to greater investment by foreign private equity players, many of which will be new entrants in the country. Greater transparency within an industry lures investors who may have been formerly reticent to invest in an unfamiliar market, this bodes well for upcoming projects in Hyderabad as such developments are likely to see investment from foreign players, particularly due to the rising prominence of the city as an IT destination as it shall soon serve as the backdrop for the operations of a large number of global IT and manufacturing giants.
Although the investment flowing into the property in Hyderabad from large private equity funds is likely to be small when compared to the money likely to flow into cities such Mumbai or Gurgaon, the greater transparency shall bode well for domestic investors as well who shall be buoyed by an improvement in sentiment towards real estate in Hyderabad.