Indian Property Investment Projections 2008

Indian Property Investment Projections 2008

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According to The Associated Chambers of Commerce and Industry of India (ASSOCHAM), Indian real estate is poised for a 34-45% growth in 2008.

2007 saw a growth of between 35-38% in real estate values. Mr. Venugopal N. Dhoot, ASSOCHAM’s President said their view is that India had already emerged as the 5th world’s largest investment destination, globally in the retail sector; the market size is currently estimated at US$ 15 billion and has been growing between 35-38% in the last several years.

He also suggested that the real estate sector is likely to grow between 40-45% but that a slow down was likely in the major cities by 2010.

Mr. Dhoot also said that an estimated US$ 10 billion is expected to flow into the domestic property market by the end of 2008. Currently over 100 of the world’s leading real estate players have already invested in Indian property, resulting in various governmental policy measures to check the speculative money.

Approximately 94% of the capital investment being made in property is in Mumbai, Delhi and Bangalore. As the property has become costly and money more expensive, the developers are moving towards other cities. The property market is likely to see an influx of US$ 90 billion by 2015 and demand for property is outstripping supply – both commercial and residential. Home loans formed 11% of total outstanding credit of commercial banks in March 2005, up from just 2.4% in March 1990. Housing loans grew at an average rate of 47.68% during 2000-01 to 2004-05, with a slow down to 27.85% in 2005/7.

Hot on the heels of this report comes the news that U.S. supermarket giant, Kroger, is planning an aggressive entry into the commercial sector. Kroger is valued at $66 billion US, and the rumor is that Kroger have already met with several prominent Indian estate agencies.

But why property instead of their traditional cash-cow? According to experts, Kroger’s objective is to gain a holistic understanding of the Indian consumer market before entering the retail sector following a backlash against big box retailing.

Also, in India it is not possible for a foreign company to hold a majority stake in a retail operation, but, since the law was changed last year, this is possible in the property sector. And with substantial property holdings, they should be able to bring pressure to bear to get this changed and will automatically have an advantage when they do finally enter the retail sector.