It was in 1977 when Dhirubhai Ambani changed the rules of the game. Realising the potential of huge middle class in the country, he went public to raise capital and created a whole new class of retail investors in India. Definitely, It was the power of SMALL that made a BIG one - Reliance.
The rule still holds. The Indian middle class has grown larger than ever, and so does the opportunity. Interestingly, a suite of real estate companies, who are not in the position to proceed through the organised financing route of initial public offering, have started approaching the public in their own ways and the carrot on offer is the assurance of regular returns on investments.
But since every company cannot be a Reliance, a small time investor, who is looking to cash in on the real estate boom in India, must do his/ her home work for identifying his real estate Reliance, before jumping into the wave.
In fact, the lure of high returns on investments in real estate has caught the attention of all the segments of investors. Though institutional investors and high net worth individuals have been able to invest through the organised route, a large number of retail investors find it difficult to own piece of property owing to the skyrocketing prices.
Similarly, a host of real estate developers have come up to leverage prospects in the property sector, but find it difficult to raise capital through the means of financial institutions. Also, not all real estate companies enjoy credentials to raise finances from primary and secondary markets, and thus suffer liquidity crunch in executing and continuing their project plans. Here, the best way many emerging construction companies have found out is to reach retail investors.
Many developers today offer RoI (return on investment) of anywhere from 10 to 24% a year to get people to invest in their projects, and some have even started issuing cheques as well.
This is largely by either new developers - who do not have the required standing to attract funds from high net worth individuals - or by developers who are expanding rapidly and need to assemble funds from a host of small retail investors.
Most of these real estate projects are in the segment of retail and office space. When asked as to how an individual can invest in properties assured of generating regular returns, new developer Khan Infrastructure says, 'One has to invest a minimum amount of Rs 18 lakh in order to avail of the offer.
