Lack of Global Standards in Realty Drives off Investors

Bangalore: Over the last two years, the real estate market of India is witnessing a slump in foreign investments and this scenario may continue in future due to lack of international standards in Indian realty sector, according to Sean Tompkins, Global Chief Executive Officer of Royal Institution of Chartered Surveyors (RICS), reports Ravi Teja Sharma of Economic Times.

During 2006 and 2009, the real estate sector of India had observed an investment of nearly $20 billion which has reduced by nearly $2-3 billion, over the past six years. Since 2005, India has been losing its ground as a promising destination for global realty investment and in today’s date, the capital in real estate market is mostly domestic capital, said Tompkins. However, due to global economic slowdown, vigilant investors are making a pause.

"There will be an expectation that standards would rise and I believe that those countries that are able to provide safe and high standard environment in real estate will benefit from significant investment flows," added Tompkins, reports ET.

Private equity investors, who parked their investment in real estate market during 2006 and 2009, witnessed less return than what they had expected. Also there are investors who lose money because of projects that are withdrawn from the market and projects that are under dispute with investee firms. According to Tompkins, to enhance the market condition as per global standard, the country needs to change the attitude when looking at the real estate market as the market is in serious need of professionalism, unlike the West.

"The biggest challenge for investors is that, though they love the attractiveness of markets like Brazil, Russia, India and China, the difficulty they have is that there isn't a profession to give them the advice or the standards to give them comfort," said Tompkins.