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Indian property market attracts high-profile investors
When considering which overseas property market to invest in, it is usually wise to look where the big names in real estate are putting their money, says Matt French.
If you agree with this rule of thumb, then you may like to consider following a certain Mr Trump into the Indian property market.
Trump Organization USA recently announced plans to launch a US$1 billion hedge fund to invest in the Indian property market. It was actually Donald Trump Junior who first became interested in the Indian property market in 2007 when he visited the Cityscape real estate conference in Mumbai.
Don't discount the opinion of this Trump though, as the son of the effervescent American real estate tycoon and The Apprentice star, is the executive vice president of development and acquisitions at Trump Organization USA.
Speaking at last year's Cityscape conference, he said India's rapidly expanding economy has fuelled demand for more residential development. Trump Junior pointed to the luxury housing sector of the Indian property market as having good investment potential, but also said the hotel and resort sector of the Indian property market would benefit from the country's flourishing tourism industry.
During his keynote speech Trump Jnr indicated his desire to invest in the Indian property market: "We feel it is now time to invest in Indian realty projects as the quality has moved up and we see emergence of some high-end developers with a product level that will support our brand."
Trump followed up on this hint in late July this year when he announced his intention to set up a hedge fund worth up to $1 billion to invest in the Indian property market. The fund will initially target Mumbai's property market and include an Indian family as investors.
"The fund will be for acquisitions of real estate in the high-end and across the spectrum," Trump Junior said in an interview with Bloomberg. "We'll start it off relatively small and grow it as we get more familiar with the Indian market. Our entry has to be in Mumbai, as that's where everything is going on right now in terms of the high-end real estate. That's the place where one is going to achieve the highest prices per square foot. It sets the tone for all of the other future developments."
When asked at the conference last year where in the Indian property market the Trump Organization would consider doing business, Trump responded: "The city I'm standing on (Mumbai), Delhi, Hyderabad and Bangalore, where the IT sector has witnessed a boom."
If you want further evidence of big names looking seriously at the Indian property market, you don't have to look far. In one of the largest private equity deals in the property market this year, financial services giant Credit Suisse has just announced a $100 million investment in Hyderabad-based Indu Projects. Indu Projects is a leading name in the construction industry in the Andhra Pradesh region of India and is currently involved with the construction of a real estate project in Pune, an IT park in Hyderabad and the construction of a Tata Power project.
So if you are someone who likes to step in the fresh footsteps left by property trailblaizers, you may like to consider the Indian property market.
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Article first published 20 August 2008