MOS Iswaran's speech at the Federation of Indian Chambers and Industry Real Estate Summit

Speech by Mr S Iswaran, Minister of State for Trade and Industry, at the 4th Annual International Real Estate Summit organised by the Federation of Indian Chambers of Commerce and Industry (FICCI)

HOTELHILTONTOWERS, MUMBAI

27 SEPTEMBER 2007

Your Excellency, the Union Minister for Urban Development, Honorable Mr. S. Jaipal Reddy
Your Excellency, the Minister-In-Charge, Urban Development department Government of West Bengal, the honourable Mr Ashok Bhattacharya,
Mr. Habil F. Khorakiwala, President of FICCI,
Mr. Sushil Ansal, Chairman of the FICCI Real Estate Committee,

Distinguished Guests,

Ladies and Gentlemen

Introduction

I am pleased to join you this morning for the annual International Real Estate Summit organized by the Federation of Indian Chambers of Commerce and Industry (FICCI). On behalf of my delegation from Singapore, I would like to thank the organizers FICCI for inviting us to this illustrious event.

Bilateral Trade And Investments
 
2. Singapore companies have been active participants in FICCI’s international Real Estate Summits. This is a reflection of our ongoing and ever deepening engagement with India which is not confined to infrastructural development alone. Singapore’s historic ties with India span across cultural, trade and political spheres. India is already a preferred destination for our investors in real estate. And in recent years, we have witnessed an increasingly closer partnership being forged. Economic relations have flourished with the signing of the Comprehensive Economic Cooperation Agreement, or CECA, in 2005. Bilateral trade has grown almost 70% in the last two years to $16.6 billion US dollars in 2006. India is now Singapore’s 12th largest trading partner and in turn, we are India’s 3rd largest export destination. 

3.Our investments in India have also seen dramatic growth. Last year, Singapore was India’s 4th largest investor with investments amounting to more than $621 million US dollars. Of these, the bulk went into industrial and urban infrastructural developments. Indian investments into Singapore have also proliferated. In 2006, there were almost 2,600 Indian firms in Singapore, more than double the number five years ago. 

4.I believe that our bilateral relations can only grow stronger in the years ahead, and will expand in scope and depth through new opportunities and partnerships.

India's Real Estate Landscape

5. Economic growth and real estate development have always been inextricably linked. India is currently experiencing this phenomenon, where a decade of strong economic growth and prudent economic policies have brought about rising affluence within the Indian population, fuelling greater and more sophisticated consumer demands. One of the most basic and critical is the need for quality residential, commercial, retail and industrial space.

6. As India continues to be one of Asia’s top investment destinations, we have witnessed an upsurge in the development of industrial infrastructure, coupled with India’s policy of developing SEZs (Special Economic Zones) as well as a nation-wide effort to boost infrastructure like roads, ports and airports. A survey by FICCI and Ernst & Young predicted that India will emerge as one of the most preferred investment destinations for global realty and investment firms in the next few years.

7. Specifically, the Business Process Outsourcing (BPO) and Information Technology (IT) boom has drawn foreign companies to set up operations in India, creating an increase in the demand for office space. The IT, software and services market in India is expected to reach US$60 billion in exports by 2010. This IT industry growth, when translated into business space demand, suggests that by 2010, the IT sector alone will require 150 million square feet of space across India’s major cities.[1]

8. The residential segment has also witnessed tremendous growth fuelled by rising disposable incomes. Sustained economic growth, rapid urbanization, the shrinking size of households and a decline in the median age of first-time home buyers are likely to continue to push demand upwards. The Asian Development bank estimates the housing shortfall at 19.4 million units, out of which 6.7 million units are likely to be in urban India.

9. On the whole, India’s real estate sector appears well positioned for long-term growth. It will be sustained by favorable demographics, rising purchasing power, and openness to FDI.

Singapore Urban Infrastructure Companies In India

10. Real estate companies in Singapore have noted the dynamism in India’s real estate sector with increasing excitement. Quite a few have already made inroads into the Indian market.

11. One prominent example is Ascendas, currently one of Asia’s largest business space providers. The company made its first foray into India with its flagship International Tech Park in Bangalore back in 1997.Today, Ascendas has a diverse portfolio of landmark projects In India, which include the Cyber Pearl and The V in Hyderabad, as well as the International Tech Park in Chennai. Two more International Tech Parks are now planned for development in Pune and Nagpur. Just two days ago, I inaugurated their latest project, The Cyber vale in Mahindra World City. As a further reflection of its confidence in India’s future growth prospects, Ascendas has recently launched its “Ascendas India Trust”[2]

on the Singapore Exchange on 1 Aug 07. This is the first India property trust to be listed in Singapore, and is well received by institutional and individual investors.

12. Apart from Ascendas, Singapore real estate majors with property investments in India include Keppel Land and CapitaLand. Keppel Land has expanded its presence in India with a 25-acre, 1,670 unit premium condominium development in Kolkata

[3] while CapitaLand has tied up with Pantaloon Retail to manage a portfolio of about 50 malls across 30 Indian cities over the next 2 to 3 years.

13. Singapore service providers are also keen to participate in and contribute to the real estate development boom in India. Those that have ventured into India include CPG Consultants, The Ascott Group, Surbana Corporation, Jurong Consultants, Ong & Ong and Architects Team 3. These companies are involved in various segments of the real estate value chain, including architectural services, master planning, landscaping, specialist engineering services providers and hospitality management services.

Singapore's Urban Infrastructure Capabilities 

14. What can Singapore companies offer? As those of you who have visited Singapore might be aware, land is a significant constraint for us, being the size of just Delhi’s inner city. But this weakness has allowed us to hone our infrastructural capabilities, converting it into our strength. We have been able to overcome our limited space and lack of natural resources to build a vibrant, dynamic urban landscape. Many of the Singapore companies with me today were at the forefront of this development effort.

15. Judicious land use planning has always been a critical consideration in our national development process. In developing our infrastructure, we continually strive to come up with creative solutions that make the most of our limited land area and ensure the most efficient and effective allocation of resources. Singapore firms have established globally-recognized expertise in master planning and design consultancy. As the major cities in India face the challenge of coping with growing populations and accelerating economic activity, Singapore’s experience in urban design and township management will come in useful.

16. In particular, I would like to touch on 2 areas – public housing and energy efficient buildings. In Singapore, 9 out of 10 citizens lived in public housing of relatively good standard, which some had said is comparable to condominium standard. Agencies like Surbana are involved in the planning of our public housing. Efficient energy usage is also of importance in densely populated cities like Singapore and India. Building energy efficient buildings is a way of pushing this boundary of achieving greater efficiency.

17. Looking forward, I believe there is potential for tremendous synergy in the marriage between Singapore master planning capabilities and India’s construction know-how. The Singapore – India Economic Zone, or SIEZ, was an idea mooted by our Senior Minister Goh Chok Tong to PM Manmohan Singh when he visited India in 2006. The SIEZ was envisaged to be a showcase for Singapore to share its capabilities and best practices in urban and industrial infrastructure in India. I am confident that with Ascendas’ experience and track record, the SIEZ will achieve a new milestone in our bilateral economic collaboration.

18. Another promising avenue for bilateral cooperation is the Real Estate Investment Trust, or REIT. The REIT concept is evolving in India. It is a financial tool which Singapore has established strong credentials over the last few years. Singapore currently accounts for 47 percent of the REIT market in Asia outside of Japan and Australia. To promote this sector, the Singapore government has put in place business-friendly processes and a conducive regulatory environment. In this regard, we are happy to see that Indian companies are increasingly aware of Singapore’s strengths as a REIT listing destination. For example, the Embassy Group, a Bangalore-based business park developer, is keen to do a REIT listing in Singapore.

[4] DLF Assets, with its large portfolio of SEZs and IT parks, has also recently revealed its plans to follow suit.[5]

Conclusion

19. In conclusion, I am glad to note the already strong level of bilateral business cooperation in the real estate sector in India. Our participation in this Real Estate Summit will provide an excellent platform to further this relationship between the private sectors of both countries. With the increasing demand for quality housing, office buildings and industrial zones in India, I am confident that we will see a rapidly growing footprint of Singapore real estate companies in the years ahead, either on their own or in partnership with Indian companies.

20. I wish you all a fruitful Summit. Thank you

[1] http://www.ibef.org/artdispview.aspx?in=58&art_id=15997&cat_id=381&page=2

[2] Ascendas India Trust or “a-iTrust” is a Singapore-based business trust established with the principal objective of owning income-producing real estate used primarily as business space in India. It is a premier business space investment trust backed by strong underlying fundamentals of the Indian economy and its growing IT and real estate sectors.

[3] http://www.kepcorp.com/press/press.asp?RID=1287&L=&Y=2006&Q=3

[4] International Herald Tribune, Tues, July 4, 2006

[5] Business Standard, Wed, Sept 19 2007.

^{from R-L: Mr Ganesh Raj (Senior Partner and Head Real Estate Practice, Ernst and Young India), Mr Ashok Bhattacharya (Minister-In-Charge, Urban Development department Government of West Bengal), MOS Iswaran, Mr. S. Jaipal Reddy (Hon’ble Union Minister for Urban Development, Government of India), Mr. Sushil Ansal (Chairman, FICCI Real Estate Committee & Chairman, Ansal Properties & Infrastructure Ltd), Mr. Pranay Vakil (Co-Chairman, FICCI- Real Estate Committee & Chairman, Knight Frank, India), Mr. Amit Mitra (Secretary General, FICCI - partially hidden), and Mr. Habil F. Khorakiwala (President, FICCI).}