“The real estate market is going to be difficult for a couple of years. It will be bad because the projects will be slower.

But it will be a better opportunity for people willing to invest. But the valuations are more reasonable now,” says Berggruen Holdings founder Nicolas Berggruen.

Also, the investments are not constrained in terms of sector or asset classes, because BH is not answerable to investors. It manages and invests its own proprietary capital, which exceeds $1 billion.

The firm has pumped in $30 million so far and will add another $20 million to this. Its first project in the realty space, a Rs 350-crore commercial project in Hyderabad, will kick off at the end of the year. The other locations for the realty space include Nagpur, Coimbatore, Mysore, Raipur and Vizag.

“We have a group of people who can execute property development from A to Z. They will acquire land, develop capability, deliver projects in housing and retail formats. Quality and aesthetics will be a major component,” Mr Berggruen said.

In India, the firm’s been active for the past two years and invests across asset classes — private equity, real estate and public markets. The firm has invested $100 million in the country so far. In terms of sectors, it’s spread across hospitality, education, car rentals, warehouse & logistics, equipment rental and real estate. Berggruen typically invests $10 million to $100 million in any single transaction.

“India has the advantage of being vast and presents dynamic opportunities. We decided to start business from zero, instead of buying into existing ones,” Mr Berggruen added. Retail and energy are the other sectors that the firm is looking at in India.

The investment bank, which has fared better than some Wall Street rivals because of smaller exposure to subprime mortgage investments, is using its global special opportunities group to finance Asian property firms and their projects.

“It’s a fantastic opportunity for us at a time when a lot of our competitors are scaling down because of difficulties accessing their balance sheet,” the group’s Asia real estate head, Bryan Southergill, told Reuters in an interview.

“In the next three years we aim to invest north of a billion dollars in this part of the world, if market conditions allow,” Southergill said. “We’re cautious about equity, aggressive on mezzanine financing, and we’ll take our time during this period of market consolidation to build long-term relationships with companies we’re going to invest with.”

Many Chinese and Indian developers are struggling to complete ambitious project because local banks have clamped down on lending to the construction industry and a stock market slump has closed off equity raising through initial public offerings.

Foreign investors are also shying away from markets where risks, as well as returns, are traditionally high. But because of a shortage of funds, developers are starting to offer plum deals.

"This year foreign capital has gone into reverse at the same time as India's current-account deficit has widened sharply. Sharmila Whelan, an economist at CLSA, a brokerage firm, forecasts that India's current-account deficit will rise to almost 4% of GDP in the current fiscal year, and to 5.5% next year. Not only is the trade deficit soaring, largely as a result of higher oil prices; the overseas earnings of Indian IT services companies (two-fifths of which come from the financial sector) are likely to shrink this year.

The nature of the capital inflows financing a deficit also matters. Foreign direct investment (FDI) is less volatile than speculative capital inflows. If we assume that net FDI continues at last year's pace, then it would more than finance the expected current-account deficits in Brazil and Mexico this year. In contrast, net FDI might finance less than one-third of India's deficit and only one-sixth of South Africa's, implying that their currencies are more at risk. The rupee has fallen by almost 10% against the dollar since late last year. Ms Whelan forecasts that it will drop by another 9% by March 2009."

Taiwan tops the list with a total pledged investment of US$8.4 billion, it said. Japan is ranked second with US$7.2 billion. Malaysia was third with US$5.1 billion.

The GSO said 381 projects with a pledged investment of US$21.5 billion were in industry and 243 projects with an investment of US$22.8 billion were in the service sector.

The top foreign direct investment projects in the first seven months include Taiwanese Formosa Group's US$7.9 billion steel plant; the US$6.2 billion refinery joint venture plant between PetroVietnam and companies from Japan and Kuwait; and a US$4.3 billion project to develop a new city in central Vietnam by a Brunei company.

Source: VN News Agency

Source: VN General Statistic Office

The FDI in real estate will increase by $21 billion to touch $25 billion in next 10 years, said Assocham.

Assocham said that its forecast is based on the fact that real estate in India would be a hot market.

It said that investors are constantly looking at India to park their surpluses as returns on such investments would be the highest in near future.

At present, the domestic real estate market is expected to be of $15 billion in which the foreign direct investment contributions is estimated around less than $4 billion.

The bank credit to this sector by end of 2007-08 has been estimated over Rs 3,50,000 crore which will multiply substantially in the coming years in view of the growth that the sector is expected to register, adds the Assocham analysis.

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What has contributed to the bullish sentiments for the Indian realty sector is the the negative economic patterns reigning across most developed countries. Plus sentimental attachment for one’s country of origin and attractive returns from an emerging economy make NRIs turn immediate attention towards India.

According to global real estate consultancy Jones Lang LaSalle Meghraj (JLLM), 10% represents a significant growth and indicates that India, despite the economic pressures, is still a desirable country to invest in. “It is no secret that the real estate market will soon permit low entry costs and high returns after the current property cycle is completed.

Developers are responding to the demand,” says Anuj Puri, chairman and country head, JLLM. Developers cater to NRI sensibilities by including ‘green’ and ‘smart home’ features and investing in superior architectural designs. While NRIs are showing an increasing preference for tier II/III cities, the metros are still preferred by those who wish to launch businesses in India, Puri adds.

However, the developers whom Sunday ET spoke to denied that the NRI market is driving the current sales in the realty market. “There is no difference between then and now. It’s the same number of NRIs then and now. India is still the flavour of the day and continues to evoke interest among people,” says Niranjan Hiranandani, MD, Hiranandani Developers. Hiranandani says that Mumbai and South cities are popular among the lot.

Ditto for Rajeev Talwar, executive group director, DLF, who feels that NRI is not a major market and it does not make up a majority of sales in the current scenario. On the other hand, realtor Parsvnath Developers , who admits that although a renewed thrust is being given to the NRI segment during the sluggish market, it isn’t as if one is going the extra mile.

“There is no special scheme for NRIs. Participation in sales campaign and exhibitions is on, like before. NRIs from Middle East, UK, USA and Canada are actively looking at the Indian real estate market,” says B P Dhaka, COO, Parsvnath Developers.

Dhaka feels that NRIs choice appears to be in and around metros and other financially active cities in states.

Developers cater to NRI sensibilities by including ‘green’ and ‘smart home’ features and investing in superior architectural designs.