The real estate market could be a potential game changer for India, according to Nomura’s Citywire AAA-rated manager Vipul Mehta.
'We have been staying away from the real estate sector, but we have been warming to it recently due to a new housing bill proposed by the government,' he said.
Speaking at a roundtable in London, Mehta, who runs the Nomura Funds Ireland-India Equity fund, said the ‘Housing for all by 2022’ policy could make the sector more attractive to investors.
'This new affordable housing policy is well drafted and very executable. Historically what has happened in India is that nice rosy policies are released and then there is no execution of the policy.
'The policy has been devised very well, it’s economically viable and is designed to be executed completely by the private sector,' he said.
Mehta currently has zero exposure to the real estate sector and had previously expressed concerns about its growth.
However, Mehta is now more optimistic and said plans to create millions of new homes by 2022, for both urban and rural India, would bring strong political mileage for the government, as well as opportunities for the private sector.
'It could be a potential game changer because the market size is absolutely huge. The new bill takes into account the dynamics of what affordable housing is and who could actually reap the benefits. Therefore we are looking at the real estate sector, but as of now we aren’t really positioned there.’
'When looking at the real estate sector we look at it with this angle in mind, affordable housing and not just standard housing developments. India is one of the most underpenetrated mortgage markets in the world and it needs to move to a better quality housing structure.’
The Nomura Funds Ireland – India Equity fund returned 91.43% in Indian rupee terms, over the three years to the end of March 2017. This compares with a 34.94% rise, by its Citywire-assigned benchmark, the MSCI India TR USD, over the same time period.