Originally published in The Mint on 18th August, 2011.
A number of Indian real estate companies held first-time road shows in London this summer, targeting rich non-resident Indians, or NRIs.
Analysts said slowing sales at home were forcing developers to look for buyers overseas.
Pune-based Panchshil Realty hosted its first road show in the British capital last month to showcase its luxury properties, including “yoopune”, styled by French designer Philippe Starck, where apartments are priced at Rs.8.5 crore.
At the day-long show, the developer sold six apartments to high net worth NRIs. Property adviser Knight Frank helped the company compile a list of 600 potential investors and buyers who could be invited to the event.
“In markets such as Singapore, Hong Kong and London, where real estate is very expensive, Indian investors want to invest back home,” said Sagar Chordia, executive director, Panchshil Realty.
“In June and July this year, a number of developers have gone to London to connect with a number of corporate clients who go for their holidays there,” Chordia said.
Home sales in India have plunged in the last three quarters, particularly in expensive markets such as Mumbai. Upscale neighbor hoods in south Mumbai, which are priced at Rs.35,000-45,000 a sq. ft, have witnessed a virtual freeze in sales.
Only 8 million sq. ft of residential space was sold in Mumbai in the June quarter, compared with 12 million sq. ft in the corresponding quarter last year and 20.3 million sq. ft in 2009.
Mumbai has about 108 million sq. ft of unsold space, while the Delhi-National Capital Region has 220 sq. ft, according to Liases Foras, a research agency.
Indian property road shows were, until now, typically organized in West Asian destinations such as Dubai and Bahrain. These used to be in the form of property exhibitions or investor interactions before a company’s initial public offering.
“Overseas road shows offer a different breed of investors, particularly for high-end property sales,” said Amit Goenka, national director–capital transactions, Knight Frank India. “Off take in India is currently so dry that those developers feel it is better to go where the money is.”
Mumbai-based Vijay Associates (Wadhwa) Developers also hosted its first overseas road show in London this July. The developer invited around 200 NRIs who sought to buy a second home or invest in the Indian property market.
“We wanted to get a feel of a road show for investors to come and see it,” said Sanjay Chhabria, director, Wadhwa Developers.
Nahar Group, another Mumbai-based developer that for many years conducted roadshows in Dubai, is now looking at new destinations such as Singapore, Kuala Lumpur and London. The firm intends to launch a number of projects in the coming months and is planning several roadshows overseas.
For its upscale Chennai residential project, it plans to host roadshows in Singapore and Kuala Lumpur, which has a sizeable Indian population from the city, said Manju Yagnik, vice-chairperson of the Nahar Group.
“Mid-segment projects are also favored by NRI investors because they are easier to sell and exit,” Yagnik said.
While most developers don’t offer discounts, some, like Nahar, offer easier payment options to overseas buyers.