Even for us, it is sometimes difficult to sort the informational wheat from the chaff and we are looking at conflicting reports coming from the Indian property markets at the moment.
On the one hand, its all good news: Mumbai Billionaire Mukesh Ambani is busy creating what is likely to be the â”most expensive home” in the world. The Financial Times is reporting that “property prices have soared” and the Indian Government has now allowed direct foreign investment in all construction projects without prior approval, which means foreign investors are permitted to invest in wholly owned subsidiaries or in joint ventures with Indian real estate companies.
There are a few minimum requirements, such as minimum capitalization requirements must be met within six months of the commencement of operations and the capital must remain locked in for three years thereafter. Foreign-invested projects must include at least 50,000 square meters of floor space and at least half the project must be completed within five years of receiving statutory clearance.
The CitiBank sponsored IndiaHome Property exhibition has just finished. By all accounts a roaring success and aimed at the “Non Resident Indian” (NRI) According to the India Times:
“India has a housing shortfall of 26 million units with the bulk of demand coming mostly from NRIs, making it a rich property market for developers to tap. The Indian property market has been increasing at between 30-35 per cent per annum, and will continue to see huge demand in the coming years.”
“The markets are very buoyant, and developers have been providing internationally-accepted standards in the property industry,” said Mumbai-based Ashish Mehrotra, business head and vice-president for mortgages at Citibank India.
On the other hand, INR news is reporting a slowdown in the Bangalore residential real estate market. “High prices, steep home-loan interest rates and anticipation of a price correction have resulted in only a marginal price escalation in the past few months accompanied by a 15%-25% drop in primary sales across micromarkets of Bangalore.” With rumors of a crash stop in the Goa housing market and thousands of unsold condos and villas in the region, clearly there is some truth to the slow down.
As usual, these conflicting pieces of information are more about sorting the sales pitch from the news. It’s difficult to know which way to turn sometimes, but this simple graph will explain everything. If you can’t understand it, be sure and ask your 12-year-old to explain it to you.