Investing in Indian Property

Investing in Indian Property

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Bombay

Sometimes, it pays to look at other news sources when looking for property investing opportunities. This article for instance, from the Financial Times:

“Thomas Cook Group is buying back the Indian business it sold to the Dubai Financial group two years ago, the first stage in its strategy to expand the brand in emerging markets.

The travel operator is expected to announce on Friday it is bringing Thomas Cook India back into its stable, re-establishing its presence in a market it entered in 1881.”

The full article is here, but basically, Thomas cook, a well-established British travel agency have decided to buy back the Indian division that they sold some time ago. Why? Because they see emerging markets such as India, Russia, and China as potentially large markets.

What does this mean to the property investor?

India is going through a major boom, which will bring property prices in line with the rest of the world. Some Indian markets, such as the Mumbai property market, have already experienced massive growth. To the point where Mumbai has become one of the most expensive office markets in the world. Mumbai’s residential market has followed along with this trend.

These are a few other Indian markets that bear closer inspection:

Delhi

Delhi, like Mumbai suffers from a lack of quality commercial property and is likely to see an upswing in values in the commercial sector. Residential supply is good here and is unlikely to see massive growths in the short term. But, long-term, Delhi looks an attractive prospect, especially in the suburbs that are only now becoming popular, such as Dwarka, Defence colony and Panscheel Park. The prime residential market seems to have peaked though.

Chennai

Grade A commercial property is in short supply in Chennai, but there is, if anything an oversupply in other commercial sectors with vacancy rates as much as 20 percent. A good long term investment, but unlikely to achieve the sort of prices Mumbai is currently achieving. Like Delhi, a lack of mid price residential property is moving demand out to the suburbs., but short term, this area seems to be playing a waiting game and no substantial movement is expected short term.

Bangalore

Bangalore commercial property is still in relatively short supply, and of the three markets is “most likely to succeed.” Demand is out stripping supply for the foreseeable future. Residential demand, particularly in high end property still outstrips supply, but there is likely to be a glut of available land as the Bangalore council frees up more and the outlook is slow growth.

Conclusions

Mumbai seems to have peaked, with the exception of the high end residential. But in general, growth is slowing to a more sustainable level, both in commercial and residential markets. Good long term prospects for all four of these cities, with Bangalore looking the most promising.