Saudi Arabia asks India to allow foreign ownership in real estate

Kamel Al-Munajjed, Chairman of the Saudi Indian Business Council.
Economic Times | 20 Feb 2019

Saudi Arabia asks India to allow foreign ownership in real estate

Al-Munajjed said numerous Indian entrepreneurs were active in his country, though the official number was small.

By Himangshu Watts, ET Bureau

New Delhi: Saudi Arabia wants India to open up its real estate sector to foreign ownership, which will lead to investments of hundreds of millions of dollars in residential and commercial properties, according to Kamil S Al-Munajjed, chairman of Saudi India Business Council. It also wants India to change laws to allow Saudis to own agricultural land to help enhance food security while reducing excessive dependence on oil, he said.

Saudi and Indian businesses are also likely to significantly increase direct bilateral business, instead of routing it through the United Arab Emirates or Mauritius because of legacy investment and legal issues, Al-Munajjed told ET in an interview ahead of the visit of the Saudi Crown Prince Mohammed bin Salman.

“Wherever we go, we like to buy real estate for personal use or business,” Al-Munajjed said. “India forbids that for non-residents… This is one of the issues we are discussing, including agricultural land.” He said Saudi businessmen are ready to pour money into real estate. “Hundreds of millions of dollars will come into the real estate market in India if rules are relaxed. Saudis will not invest in infra projectsNSE 2.64 %. That is for governments. For the private sector in Saudi Arabia, real estate is the business,” he added.

Al-Munajjed, managing partner of real estate and construction firm Urjuan Property Developers and a director of Span Arabia, a logistics firm in the Gulf region, said numerous Indian entrepreneurs were active in his country, though the official number was small. “In Saudi, we have 400-500 Indian companies, officially. Unofficially, we have tens of thousands. The Crown Prince has solved legal and investment problems,” he said. “A lot of Indian companies would work from the UAE because within the Gulf Cooperation Council, any UAE citizen can work freely. They would all go to Dubai, where they found a nice environment and open business in Saudi Arabia.”

People from Kerala run 90% of Riyadh’s 100,000 groceries, he said. “One of the largest supermarket chains is owned by an Indian,” Al-Munajjed said. “He had a Saudi sponsor. Two years ago, he bought 100% of the business. Now, with new rules in Saudi, you are allowed 100% of your business. Only (in) two to three (sectors), like oil exploration, you have to be Saudi (national). Other than that, foreigners can own 100%.”

Similarly, only 50 Saudi companies operate in India directly, but the actual number is in hundreds, Al-Munajjed said. “Legally, they are incorporated under a UAE or Mauritius entity,” he said. “Now, with reforms of Prime Minister Narendra Modi, it has changed. I think what the PM did is amazing. Businesses are undeclared due to tax reasons or fiscal reasons. But now with changes, things are much clearer.”

Asked if Indo-Pak tension would hurt business sentiment, particularly in the wake of the Crown Prince’s visit to Islamabad, he said Riyadh had strongly condemned terrorism. He said the Indian Ambassador had abruptly cancelled a dinner engagement on the evening of the terror attack. “By 6 pm, there was a strong condemnation statement. As a Saudi, I can tell you, it’s a huge thing to get the statement on Friday morning.”

Al-Munajjed said,“Three weeks ago, we met (commerce minister Suresh) Prabhu in Mumbai. I’ve never seen anyone as enthusiastic to develop business ties with Saudi Arabia.”
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