Chinese Mega Developers to Plough Billions into Indian Real Estate

Mangalesri ChandrasekaranDecember 27, 2017

 

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.

Demonetisation effect

 

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.

POST COMMENT

You may also like these articles

Malaysian Pension Fund Buys Menara AIA Cap Square

  Malaysia’s second largest pension fund Kumpulan Wang Persaraan (KWAP) has bought Kuala Lumpur’s Menara AIA Cap Square from Germany’s Union Investment Real Estate (UIRE). JLL Malaysi

Continue ReadingDecember 22, 2016

5 Trends That Could Affect Asia-Pacific Real Estate In 2017

  Although 2016 has been a year of global uncertainty, marked by a spring of nationalist-populist and far-right ideologies dawning on both sides of the Atlantic, real estate markets in Asia-Pa

Continue ReadingDecember 22, 2016

Sunway Construction Receives Recognition From Asean Corporate Governance Transperancy Index

  Sunway Construction Group Berhad received a prestigious award at the Malaysia – ASEAN Corporate Governance 2016 Awards. The awards, presented by the Minority Shareholder Watchdog Group

Continue ReadingDecember 23, 2016

Is It Right to Raise Minimum Prices for Foreign Buyers in Indonesia?

  Several real estate personages have welcomed the revised schedule of minimum property purchases for foreigners in Indonesia, The Jakarta Post reported. “If the government keeps the pric

Continue ReadingDecember 23, 2016

Feedback