New Delhi: Indians living in the United States have for years come to Pune-based developer D.S. Kulkarni Developers Ltd, to buy retirement pads and vacation getaways in their country of origin. Now, Kulkarni is taking a bit of India to them.
Kulkarni is building 19 single-family homes in New Jersey and plans to invest about Rs100 crore in the US market.
One of the first buyers was a Pune couple who wanted a second home close to their son working in New Jersey. The developer says he’s now negotiating for 3,000 acres in upstate New York where he hopes to build a community for non-resident Indians (NRIs), complete with a temple, community centre and tulsi vrindavan or a front yard decorative structure that holds holy basil plants.
The houses sell for about $650,000 (Rs2.88 crore).
Kulkarni, whose US subsidiary DSK Developers Corp. has an office in Palisades Park, New Jersey, is also considering opportunities in Australia and West Asia.
Kulkarni is not alone.
Paranjape Schemes, also based in Pune, is building houses in Melbourne, Australia and is looking into building a retirement community in San Jose, California. And Hiranandani Developers Pvt. Ltd, one of India’s largest builders, has partnered with a Dubai company to build one of the world’s largest residential towers in Dubai.
“Whether the buyers are American or Russian, the construction technology is the same,” said D.S. Kulkarni. “When you get an opportunity in India and or anywhere in the world, why not grab it.”
It might seem odd that Indian builders would look West at a time when the interest in US real estate is coming down and foreign investors are scrambling to get a piece of the real-estate market here.
But some of the builders say that the experience is invaluable and also that they can tap into more Indians buying homes outside India, be it Indian residents or NRIs.
Kulkarni said he’s also buying land in the US at a time when property prices there are cooling and hopes to sell as they start to rise.
Shashank Paranjape, managing director of Paranjape Schemes, said his company is taking a long-term view that the Indian market won’t stay strong forever and it makes sense to spread risk across markets.
“It’s better not to put all eggs in one basket,” he said.
Mumbai-based Hiranandani and Dubai-based ETA Star started construction late last year on 23 Marina, a 90-storeyed tower in Dubai that the developers say will be one of the world’s tallest residential buildings when completed.
Hiranandani’s decision to go to Dubai makes sense because of the rapid increase in rentals there during the past few years, Pritam Chivukula, national director of office leasing and retail leasing for Colliers International India, said.
But, he said, the yields are now so great in India for developers—at least 30%, that it makes little sense to go to the US or Australia, where the returns are much lower at about 6-8%.
Worse, he says, not many potential buyers know who these developers are, and landscape is already dominated by well-established players.
Chivukula agrees that Indian builders might be seeing an opportunity to leverage their brand name with Indian buyers overseas. Some Indian builders are doing just that, but in a different manner.
Ansal Properties & Infrastructure Ltd, which was one of the early ones to foray overseas and developed apartment projects in Thailand in the late 1980s and early 1990s, with a local player, is now setting up offices overseas to sell its India projects.
Ansal has since turned its focus entirely on India where real-estate prices in cities and their suburbs have risen by about 30% during the past year. Ansal has recently received proposals from other developers to build projects in West Asia and other areas but “we haven’t taken a call on that yet,” said Anil Kumar, chief executive of Ansal.
Ansal is now setting up an office in Dubai to market its Indian apartment projects to NRIs there, said Kunal Banerji, Ansal’s vice-president, marketing and communications.
The company is also considering plans to open marketing offices in London, New Jersey and Silicon Valley, where many wealthy Indians live.
Pune’s Kulkarni agrees there’s plenty of work to do in India and that’s mostly where he’ll be building. He said he’s simply looking to expand to places where his customers live. About 65% of Kulkarni’s homes are sold to buyers with overseas addresses, many of which are in New Jersey.
Paranjape said he also looks forward to the challenge of working outside of India where his company isn’t known and where he has to learn about a new development and approval process.
Paranjape plans this spring to start building 73 homes in Melbourne where, he said, land is relatively cheap and he can gain some experience in a western market before his next move. Paranjape said he’s also looking at the possibility of building a retirement community in San Jose.
Paranjape said he’s looking at a niche market that the larger US builders would ignore.
“You cannot be only narrowing down in places where you can multiply your money,” Paranjape said. “You have to look forward and look 10 years ahead. It’s strategically relevant to have some money abroad.”
Hiranandani’s managing director Niranjan Hiranandani said he doesn’t expect a mad dash to develop overseas because developers have their hands full keeping up with India’s housing needs.
Hiranandani said his company’s recent West Asian venture provided a good business opportunity and a chance to learn something new.
Dubai is “an international centre, which exposes us to different people, different opportunities and construction technologies,” Hiranandani said. “It’s a different type of clientele and architecture. ”