Published on 04 September 2005 at 03:02 pm
Filed in Property News for India » Citigroup’s Indian Property Initiative Identified
In the past week there has been a great deal of speculation in the press about various changes taking place at Citigroup. In particular reports have been coming out about how the US banking giant has identified the real estate sector in India as a significant target market for both their investment banking division and their real estate division.
According to various reports Citigroup have launched a brand new Global Real Estate Group which is a partial amalgamation of their fixed income and investment banking sectors and which will focus on real estate initiatives globally in an effort to move away from more traditional investment banking activities....
Clearly it is hoped that diversification in this way will open up new profit areas and lead to greater investor interest as property proves once again to be an attractive and tradable commodity for investors. Citigroup’s Head of Global Real Estate Investment Banking will run the group, and when interviewed about his immediate target markets he cited both India and China as offering great potential.
Meanwhile the banking giant’s dedicated property investment division - Citigroup Property Investors - has been reported to be making a direct move into India in the coming months to establish its first Indian property fund. The fund will likely incorporate both off plan, pre construction phase developments as well as more established property projects initially.
It’s probably about time some of the larger banks looked at India; its property sector has been emerging positively for at least the last five years and it has been enjoying consistent capital appreciation and rental yields throughout that period. Rental yields in the commercial property investment sector have been extremely strong with the establishment of large call centres, IT and IT servicing centres. The establishment of these centres has in turn led to an increase in demand for residential property units as the young professionals working in these employment centres have increased their purchasing power and have been demanding houses and apartments to purchase.
Following on from this boom in demand for housing stock there has naturally been increased interest in retail developments - after all, people need to shop - such retail developments have also been achieving strong and consistent rental yields.
According to professional real estate consultants in India the hottest emerging property investment areas in the country for 2005 to 2006 will most likely include Hyderabad, Pune, Kolkatta, Ludhiana, Jaipur, Ahmedabad and Chandigarh because of the increased investment going into these areas, the large companies like GE who are setting up shop in these areas and the development of new centres of employment in these areas.
Hyderabad, Pune, Kolkatta and Chandigarh achieve an extra layer of attraction in that they are fairly sophisticated, they offer excellent facilities, amenities and social structure and they enjoy a pleasant climate as well. So it seems that Citigroup will benefit from having plenty of properties and locations to consider when they finally begin targeting Indian real estate.
