The recent unexpected and unprecedented multifront assault on Israel by the Hamas militant group might lead to a temporary halt in Israeli investments in India's real estate sector. to real estate experts.
This effect is expected to have a greater influence on the commercial real estate sector, where investments from Israeli firms may encounter delays, further exacerbated by rising input costs due to soaring prices. crude oil prices.
The world economy is contending with its second major geopolitical upheaval since 2022, as the ongoing conflict between Ukraine and Russia has already resulted in increased commodity and energy prices.
Since establishing diplomatic relations between India and Israel in 1992, bilateral trade and economic cooperation have seen rapid development. According to data provided by the Indian Embassy in Tel Aviv, merchandise trade has increased from $0.2 billion in 1992 to $10.1 billion in FY 2022-23. Although real estate transactions represent a small portion of this total, David Keynan, Vice Chairman of the Federation of the Indo-Israeli Chambers of Commerce (FIICC), has pointed out that investments from Israeli firms range from $10 million to $30 million annually, with an annual growth rate of 20-30 percent.
FIICC, a non-profit organization in close collaboration with the Indian and Israeli governments, plays a crucial role in fostering investments in various sectors in India, including real estate, by facilitating meaningful connections.
"By 2008, direct investments from Israel had ceased. Nonetheless, indirect investments from Israeli companies have gained traction since 2015-16. Keynan mentioned that many firms opt for avenues like Real Estate Investment Trusts (REITs), public markets, debt funds, and real estate-focused bond funds. Amit Goenka, Managing Director and CEO of Nisus Finance stated that by 2010, several Israeli companies had already invested significantly in the Indian real estate sector, with a particular focus on Hyderabad.
According to reports, PBEL Property Development Ltd, a real estate firm in a joint venture with an Israeli company, invested approximately Rs 500 crore in Hyderabad by 2010. Confirming this, the company informed Moneycontrol on October 18 that the Israeli firms had already concluded their involvement in our Indian joint venture back in 2016.
Impact on Indian real estate :
The residential segment in India is set to remain robust, propelled by a significant proportion of local investors backing the sector.
Goenka acknowledges the potential short to medium-term impact on capital and businesses transitioning from Israel to India. However, he emphasizes the importance of a thorough global economic analysis to gauge this impact's magnitude.
Given the prevailing global challenges influencing investment prospects in Europe and the US, Goenka points to the Indian economy, following China, as the upcoming growth narrative for global opportunities, encompassing real estate. He foresees that Indo-Israeli investments in the sector will persist, albeit at a gradual pace.
Similarly, real estate consultant ANAROCK Group issues a cautionary note, expressing that, even if the impact persists for an extended period, the real estate sector might undergo. Minimal consequences as long as the conflict doesn't escalate to include other Western nations.
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