Appeal increases for Chinese investors in India’s real estate sector

It is not uncommon for most large-sized Chinese companies, whether state-owned or private, listed or unlisted, to have a real estate business or division within their organisation. As such, in the past decade or so, many Chinese companies across sectors have booked substantial profits on account of their real estate assets in China. Others have bulked up their asset base by continuously investing in real estate. This strategy has served them well by providing free cash flows that can be diverted to other businesses, or providing collateral for much needed debt to fund expansion.

There are also companies that have focused exclusively on real estate and benefited enormously from China’s rapid economic growth. Some of the large real estate companies in China have projects in almost every provincial capital and most second-tier cities. This unparalleled coverage, combined with the ever-growing demand from first-time buyers and investors, has ensured their rise to the top.

With economic growth gradually stabilising and real estate prices at all-time highs in most Chinese cities, several Chinese companies are now looking to replicate their success in the real estate business in foreign jurisdictions. India, with its growing income levels and burgeoning population, might be emerging as a promising destination for Chinese real estate companies.

Santosh Pai and Vikas Kumar are partners at D H Law Associates. D H Law Associates is the only full-service Indian law firm with an active China practice since 2010