With real estate development in India becoming increasingly organised, foreign investors are vying for a piece of the pie, expecting 20 to 25 per cent project return and and between 9 per cent to 11 per cent annual yield on investment.
However, returns in most cases are higher than expected, despite the possibility of 20 to 30 per cent of depreciation possible in certain over-heated project-specific pockets.
The demand for corporate space in India is higher than the supply.
Therefore, rentals are not expected to depreciate in the near future, said Vincent Lottefier, the India country head for real estate service firm, Jones Land LaSalle.
This would ensure a high probability of foreign investment in organised real estate development in the country.
While India might have an advantage in terms of access to and cost of labour, Lottefier suggested a need for increased transparency in the real estate business in India.
However, according to current global transparency index, India has graduated from opaque to semi-opaque, while China still graded as opaque by the same standard.
JLL is working towards developing a transparency index solely for India by 2008, Lottefier said.
This lack of transparency has resulted in $ 10 billion worth of real estate investments being allocated for India by foreign agencies, but only up to dollars two billion being realised so far.
Alongside property consultation, JLL has also started operating in the property maintenance sector.
This, according to Chris Hunt, regional director, South East Asia, is expected to grow at 50 per cent year on year, while JLL's overall business in India should have a 30 per cent year on year growth.
Currently JLL is managing 15 million square feet of asset area in India.