Biggest Indian-Canadian landlord eyes India's 'dream' market Assetventures

To boost foreign direct investment (FDI) in real estate, the government may remove the mandatory three-year lock-in period for overseas investments in the sector.

The department of industrial policy and promotion (DIPP) has proposed this move, with a draft cabinet note on the proposal being circulated for inter-ministerial consultations. Doing away with this lock-in period has been a long-standing demand of Indian developers as well as foreign investors.

The government had permitted 100% FDI in the sector in 2005. However, this was subject to certain conditions such as a minimum capitalization of $5 million by the foreign investor and non-repatriation of the original investment for a minimum period of three years.

Canada's biggest Indian landlord Bob Dhillon, who started his company from the back of his car and now owns more than 6,000 rental properties across the country, is set to enter the Indian real estate market.

The liberalization of the real estate sector led to FDI inflows increasing from $151 million in 2005-06 to $2.03 billion in 2008-09. DIPP now argues that no sector, except defence, has a lock-in period. “Based on experience, this condition no longer seems necessary,” a DIPP official said on condition of anonymity.

Dhillon, who has been invited by Prime Minister Stephen Harper to join him during his visit to India beginning Monday, is bullish on the Indian market.

"Despite the current slowdown, I am sure the Indian real estate sector will take off in a big way. We are ready to come here next year," says 43-year-old Dhillon whose Mainstreet Equity is the first Indian-owned company to be listed on the Toronto Stock Exchange.

Dhillon, who started selling homes at the age of 19 and became a millionaire at the young age of 21, says: "Today, India is a realtor's dream. It is the fastest growing real estate market in the world after (western) Canada.

Three things make India a dream destination for him, he says.

"One, 50 percent of India's population is below 25 and they will spur demand for housing. Two, a vast majority of Indians live in rural areas which are set to see a huge housing activity. Third, as prosperity increases, people's hunger for home ownership will also increase.

"These three things are any real estate man's dream," he says.

Dhillon, who was born in Japan and educated in India, keeps a close watch on the Indian real estate market and has made many presentations on it at various fora.

About his inclusion in the prime minister's delegation, he says: "Because the prime minister wants to focus on economic ties with India... He sees that Canada and India have a huge economic future.

"We have a new generation of Indian businessmen in Canada who will bridge these two great economies. We will bring financial and intellectual inputs into this relationship."

Dhillon says the visit of the Canadian prime minister could not have come at a better time as the worst of the economic slowdown seems to be over.

"We have two great like-minded prime ministers. Stephen Harper and Manmohan Singh are both economists and policy driven. The visit will definitely boost our business relationship," he says.

Interestingly, Dhillon's company has boomed even in these troubled economic times. In fact, he has smartly leveraged the current crisis to expand his company to take its fortunes to well over $1 billion.

Explaining it, he says: "We have flourished because of the type of real estate business we do. We own mid-segment apartments mostly in western Canada which was not that badly hit.

"Then we had a lot of cash flow which we used to buy back 40 per cent of shares. Further, we have taken advantage of low prices to buy more properties."

The Indian king of the Canadian real estate considers his upcoming 2,300-acre island in Belize (Central America) the jewel in his crown. He is developing it into a world-class tourist resort for Hollywood celebrities. The island amid pristine blue sea waters will have hotels, golf clubs, casinos, condominiums, high-end houses and other facilities.

The likes of Madonna and Leonardo DiCaprio will be its residents, says Dhillon whose family first emigrated to Hong Kong, then Liberia and finally Canada from Tallewal village near Barnala in Punjab.