Indian Property Market Hots Up

Indian Property Market Hots Up

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Soaring office rents combined with a shortage of apartments is luring developers like Donald Trump, Emaar Properties and Damac Properties to India.

Damac, a closely held developer based in Dubai, plans to invest an estimated $5 billion in India over the next three years as a booming economy spurs demand for real estate.

Damac plan to construct houses, offices and shops in Mumbai, New Delhi, Hyderabad and Bangalore. The first project will be started in 12 months time. Damac has built waterfront luxury projects in the United Arab Emirates and is investing in Saudi Arabia and Egypt as it expands it’s sphere of influence.

“There is a latent demand for high-end and luxury properties as the economy booms and income levels rise,” said Malvika Chandra, head of India research at Knight Frank in Mumbai. “The right products are getting lapped up.”

India faces a shortage of 25 million housing units, according to government data. The government is seeking to encourage the purchase of homes by giving tax breaks and ensuring easy availability of bank loans.

The Indian economy is the fastest-growing major economy after China. India is poised for 9 percent growth in the year to March 31, following an average 8.6 percent average rise in the past four years.

The number of Indian millionaires rose by 20%, the second fastest in Asia after Singapore, to about 100,000 last year. The price of houses in south Mumbai has doubled in the past two years alone, fueled by rising demand and limited supply.

The Indian boom is spreading to the commercial sector as well, with Mumbai offices being second in price only to London. Mumbai is the center of Indian commerce, with India’s main stock exchanges, companies and the main trading center for gold, diamond and commodities. Along with what should be “the most expensive home in the world.”

Mumbai Aerial View

Developers including Emaar, Lodha Developers and Oberoi Constructions Pvt. are seeking to benefit from rising demand in not only Mumbai, but also New Delhi, Bangalore and Hyderabad, the main hub for the telecommunication and pharmaceutical industries Wary of high end stagnation in more well developed markets, the Indian developers are concentrating their efforts on the mid-range properties most of which are being developed by Emaar, DLF Unitech and Parsvnath.

Venture capital firm Indiareit Fund Advisors yesterday said it plans to invest $38 million in Samira Habitats, a company that’s developing luxury villas and apartments in Alibag, a series of islands on the mainland across from Mumbai. Houses in the 400-acre project will cost between $125 – 250,000.

The Middle East’s biggest real- estate developer by market, Emaar MGF Land, plans to sell 117 million shares of it’s Indian unit, hoping to raise $1.5 million in the initial offering.

Resources:

Knight Frank India

Trump Properties

Damac Properties

Emaar Properties

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