Mumbai/Bengaluru: Two years after announcing grand plans for India, leading Chinese developers Country Garden, Dalian Wanda and China Fortune Land Development (CFLD) are staring at uncertainty.
Hong Kong Stock Exchange-listed Country Garden, which opened several offices across India, has cut staff by more than half, a person aware of the matter said on condition of anonymity. Several top Chinese officials have left and its Pune and Hyderabad offices have been closed, the official said on condition of anonymity.
Property consultants said the inability to find large projects and challenges of dealing with local bodies have delayed their plans. Besides, the Chinese government recently curbed outbound investments in sectors like real estate.
“About a year ago, Country Garden had nearly 300 people, including Chinese, in India. Now, it is less than half. There are only bare minimum people in each of its existing offices,” said the official cited above. Offices in Mumbai, Bengaluru and Gurugram are still operational.
Country Garden was in advanced talks with builders such as Wadhwa Group and Century Real Estate Holdings Ltd, and had even signed term sheets with land owners and local developers. “Apart from a single joint venture deal in Mumbai, none of the deals have taken off,” said a person familiar with the matter.
Email queries sent to Country Garden and Wadhwa Group were not answered.
Dalian Wanda, which announced $10 billion investment in India, and Shanghai-stock exchange listed CFLD are yet to find their first projects in India. Both had made separate agreements with Haryana government in 2016 to build large townships and industrial parks.
Email queries to Wanda and CFLD remained unanswered.
“It is difficult to sign large-scale projects. First land is priced high and funds don’t come cheap in India,” said Rajeev Talwar, chief executive officer (CEO) DLF Ltd, which held talks with officials of Wanda group in 2015. “It was only a familiarization meeting facilitated by the government of India. We haven’t heard anything from them after that,” he said.
Two transactions involving Fosun Group are also stuck because of Chinese restrictions. The company was close to buying 51% stake in Bengaluru-based Nitesh Estates for ₹800 crore. It was also close to signing a deal with Ahuja Constructions in Mumbai for ₹350 crore. “The deal with Nitesh was almost done. Now, it seems it will take another two months after which it should get concluded,” said a person familiar with the development.
“The initial euphoria among Chinese developers has died down. Tightening of norms for capital investment by the Chinese government has affected not just investments in India but their global expansion plans,” said Shobhit Agarwal, managing director and CEO, Anarock Capital.
Media reports have said that China has started targeting “irrational deals” often involving hotels, sports clubs and cinemas after outbound investment in 2016 hit all time high of $170 billion, causing the value of yuan to slump and leading to massive capital outflow.
Apurva Muthalia, managing director, Fosun Property Holdings (India) and Gautam Ahuja, managing director, Ahuja Contructions did not respond to text messages and calls.
Ramesh Nair, country head, JLL India said the Chinese developers are revaluating their business plans. “However, it’s still not late for Chinese developers to make an entry into India. What Indian developers lack in ability to execute and complete large projects on time, the Chinese developers can bring that to the table,” Nair said.