China and India, the largest nations on earth, have accrued wins in the property game this year. However, it’s likely that India will be having a more bullish 2017, aided by genuine political reform and a pulsating economy.
Even Chinese developers are taking notice. Dalian Wanda has vowed to funnel USD10 billion into India, while Fosun International is reportedly preparing to invest USD1 billion via an investment platform, Forbes noted. Such big-ticket deals have proven enticing in light of the Indian government’s decision to eliminate major restrictions on FDI last year.
Here are 5 reasons why India might be counting down to a gainful year:
Better investment prospects
It won’t be Beijing, Shanghai, or Shenzhen that will catch the eye of most investors next year, according to the latest Investment Prospects index in Urban Land Institute and PricewaterhouseCoopers’ Emerging Trends in Real Estate Asia Pacific report. It will be Bangalore and Mumbai; the two urban powerhouses toppled Tokyo and Sydney off the index’s perch this year. The Indian megalopolises have never been bigger hubs for outsourced IT services, as evidenced in the growth spurt of business parks this year.
Prime Minister Narendra Modi’s surprise campaign to put certain denominations of Indian banknotes out of circulation is expected to strand economic growth for at least two quarters, according to Japanese brokerage Nomura.
However, it would be worth it in the end. The primary market, usually populated by reputable developers and buyers who undergo legal channels to finance their home purchases, will be a huge beneficiary.
“Over the long term, the Indian real estate sector will emerge stronger, healthier and capable of long periods of sustained growth,” said Ashwinder Raj Singh, CEO for residential services at Jones Lang LaSalle India.
“As of now, there is no reason for developers and investors who have conducted their dealings transparently and legally to panic. It will essentially be business as usual for them.”
Faster GDP growth
China’s economy is leaping and bounding astronomically, but it’s still relatively two steps behind India. While the Middle Kingdom registered a GDP growth of 6.7 percent, India is projected to end this year at 7.2 percent, according to Thomson Reuters.
Early estimates peg India’s economic growth prospects next year to be at 7 percent, while China will lag behind at 6.3 percent, Forbes reported.
Lower interest rates
The Reserve Bank of India (RBI) has repeatedly sheared interest rates over the past two years. The benchmark repo rate alone was cut to its lowest level in six years in October.
Such moves have made for a better cash flow into home purchases as well as a better borrowing environment for first-time mortgage applicants. Meanwhile, China, bent on stemming the tide of housing inflation, introduced property curbs in several mainland cities this year, many times at short notice.
Rising middle class
Domestic consumption is at an all-time high in India with the explosive growth of its middle class. There are now 600 million people in the Indian middle market, defined as citizens spending anywhere between USD2 and USD10 per capita every day, according to a recent study.
Furthermore, the “affluent consumer” segment, which resembles the global middle-class consumer, will account for 40 percent of all Indian consumption by 2025, compared with 26 percent in 2015.
This story was originally published on www.property-report.com on 22 December 2016.