Realty As The New Financial Instrument In India

Realty is growing as new financial instruments in India. Several domestic as well as international companies have shown their interests in it. In this paper we will discuss about that briefly.In India, realty, that is, the real estate market is growing as a financial instrument.
Funds are specially allocated by the government and as well as many big private companies for real estate. In 2004, GlaxoSmithKline, the Pharmaceutical giant, put 19.5-acre Mulund plant for Rs 80 crores. Wyeth Ltd, another drug producer, put its office in Mumbai for Rs 15 crores.

Wyeth already had sold its Ghatkopar plant for almost Rs 60 crores to the Runwal Group earlier.On the other end, Mafatlal Industries sold its 500-acre NOCIL facility, in Mumbai, for Rs 800 crore to Reliance Industries Ltd as a part of its debt-restructuring program. The Bombay Dyeing Group also has come down to the ground.

So it is very obvious that the next big thing to happen in the financial sector is the emergence of realty as a financial instrument. According to the business experts, the property funds as well as the mutual funds for the land & property sector are ready to flourish across the country within a short span of time.
Several overseas giants like, Morgan Stanley, Citi Group and CapitalLand also has shown their interest for realty investment in India. Some domestic giants, like ICICI Bank, Kotak Mahindra, HDFC etc, have already moved a step forward towards realty related investments.

However, still the idea of property fund is not clear to all and nobody knows exactly how those will be operating. One model is available in the market to accelerate the realty funds and that is the Real Estate Investment Trusts allover the world. According to this model, the trust will be a traded company, which will own and at the same time manage real estate, and the small investors purchases the shares from the stock exchange.

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Last Updated on : 1st August 2013