Property Boom In India

Market experts are visualising a high growth in Indian real estate value. It is expected to rise from US $12 billion to $90 billion by the year 2015.
 
 Martin Bowen, Sales Director, Profile Europe (UK) Ltd, expressed his views, “The residential property market is experiencing exponential growth right across India, but especially in urban areas and those close to the government’s new specialized industrial zones”. Further he added, “Recent figures cited by the Bank of Baroda’s Chief Economist show properties have appreciated by as much as 60% to 100% over the last 12 months in most towns.” Bowen further expressed his views and said that there is a loss of some 20 million units. The main reason behind this is, about 55% of Indian population being under the age of 25 and the fact that the economy is booming. Other reason behind it is growing middle class who is looking for quality accommodation due to growing disposable incomes. Further he added that the growth in mortgage market and declining interest rates which have made property more affordable despite actual property price increases.

3 Comments

  1. Posted April 11, 2008 at 3:08 am | Permalink

    Property boom in india is due to the fact that now a days paying rent or temporary accommodations are not seems to be good housing options.

  2. Posted April 15, 2008 at 6:21 am | Permalink

    In Delhi for two small shops of 600 square feet each, shopkeepers now pay something between Rs 1.5 and Rs 2 lakh per month. As par the tenants, there has been an increase of 10-15 percent in the property rates where Metro line is ready, and the landlords say property pries will rise further.
    Resident of MG Road Delhi are not sure about rate of property price. They think that this is a temporary sop in an election year (Delhi assembly elections are due later this year). After the election same sealing drive will be started again and all the rise in property price will be lost due sealing. No one will like to buy the property in that area in which after every certain period a sealing drive starts and demolish all the construction.
    Some shopkeepers still prefer to pay the increased rents and shifts from MG Road. “I have invested lakhs in furnishing this showroom and if I have to remove all this, my investment would go waste,” said Deepankar Chaudhary, who runs a shop selling carpets in MG Road.

  3. Posted April 15, 2008 at 6:46 am | Permalink

    When Farallon Capital Management, a U.S. hedge fund, and its joint-venture partner, Indiabulls, snapped up an 11-acre property in central Mumbai in March 2005 for $54.5 million an acre, the purchase was called an act of idiocy by local developers. A few months later, when the same joint venture offered $95.5 million an acre for a nearby property, its was the second-lowest bid.

    Property prices in India are rising fast, and not just in the biggest cities. As the tech boom spreads across the country, as more Indians buy homes, and as the economy grows at faster than 8% a year, real estate is attracting more investors, many of them from abroad.

    “India is one of the last few countries where there is primary demand for real estate rather than individuals trading up,” says Rajiv Sahney, who runs the India operations of New Vernon Advisory, a $1.4 billion New Jersey hedge fund.

    Merrill Lynch forecasts that the Indian realty sector will grow from $12 billion in 2005 to $90 billion by 2015. “India is the most exciting real estate market in Asia,” says Michael Smith, head of Asian real estate investment banking at Goldman Sachs. “It’s one of the last major countries in Asia with an improving market.”

    That improvement worries some. Concerns about an asset-price bubble have led the Reserve Bank of India to raise the risk weightage on real estate loans extended by banks, and mortgage rates have gone from 7.5% to about 9.5% as a result. That’s still well below the 15% rates that most Indians were used to, but it’s enough to raise questions about whether the speculation of the past year and a half, which has driven land prices up by 30% to 100% and real estate stocks up as much as 2,000%, may be coming to an end.

    The run-up in prices has attracted the likes of Morgan Stanley, which has invested $68 million in Mantri Developers, a midsized construction firm in Bangalore, and Merrill Lynch, which invested $50 million in Panchsheel Developers, a regional builder. Foreign companies have also poured money into funds that invest in Indian developers. GE Commercial Finance Real Estate, for example, has invested $63 million in an $800 million fund that is building IT parks, and Calpers and the Oregon Public Retirement Fund have invested $100 million each in the IL&FS India Realty fund.

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