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Buying in India
India, alongside China, is one of the two fastest-growing global economies. In the last 12 months to March 2007 GDP grew 9.2 per cent, fuelling a new Indian rich list, as well as an emerging middle class who are eyeing housing, material goods and a ‘lifestyle’ to match.
The Indian real estate market is currently on fire and fuelling the flame is residential property in particular. The spark for the explosion can be attributed to the early 2005 easing of rules on foreign investment in the construction industry, undertaken by the Indian government in a bid to revamp the country's crumbling infrastructure, and looser credit policies, which has created demand for more homes as mortgage lending has become easier and more affordable.
Subsequently, the past two years have witnessed doubling property prices in India’s big ‘Tier I’ cities of Mumbai, Bangalore (Indian Silicon Valley) and Delhi. A recent study by Cushman & Wakefield predicts that by 2011 some 400 new townships will be needed for 200 million people as India’s cities currently lack 12 million homes. The fact makes a compelling investment case for a ‘1 billion person’ market.
The Tier II cities of Hyderabad, Chennai and Pune are close behind in the property stakes, becoming international business process outsourcing centres as well as scientific and technology hubs. Increasingly India’s youth, such as the rafts of graduate software engineers earning in excess of $1,000 monthly, is the demographic driving India’s property boom.
Chintan Mahida from Nubricks.com and herself of Indian origin, says: “The increasing westernisation of India’s ambitious youthful masses means the traditions of living at home with parents are being cast aside in favour of home ownership. However, rising mortgage rates and surging house prices are putting city centre apartments out of reach, resulting in the rise of India’s suburbs.”
In south Mumbai, for example, apartments are priced US$9,000-10,200 per m2, according to online resource Global Property Guide, making it the seventh most expensive city worldwide. Property prices in other cities in India are significantly cheaper than in Mumbai. In New Delhi, the administrative capital, used apartments cost around US$2,000 to US$3,000 per sq. m. In Bangalore, India’s Silicon Valley, prices are around US$950 to US$2,000 per sq. m.
