2017 Is Going To Be A Good Year For India’s Property Marketadmin
2017 Is Going To Be A Good Year For India’s Property Market
It looks set to be a bumper year for India in 2017 when it comes to real estate and the economy as a whole. That makes a marked turnaround for a persistent underperformer in Asia – India.
The nation has shot to the top of the list of preferred destinations for real estate investment in the eyes of major institutional investors. It is also the fastest-growing major economy, set for growth of 7.0% next year after this year’s projected 7.2%, according to Thomson Reuters.
That’s ahead of China’s 6.7% growth rate this year, expected to slow to 6.3% next year – almost a full percentage point below India. And it is greater domestic consumption that is driving India’s improvement, suggesting the middle class is truly coming into its own – and sure to demand housing to suit their tastes.
The recent highly controversial demonetization initiative to render higher-valuation notes worthless is designed to drive cash from the “grey economy” into the mainstream. That is likely to knock growth temporarily, with Nomura forecasting a two-quarter stalling period, knocking one percentage point off growth. But in the long run, driving “black money” into the real economy is likely another long-run driver of growth.
It’s about time. The world’s second-most populous nation has been a sleeper, particularly when compared with China. India’s 1.3 billion people isn’t far behind China’s 1.4 billion and is expected to be the world’s most populous nation by 2022, according to the United Nations.
Consumption now accounts for a larger share of India’s economy than at any point since the start of this century. The fast-growing population has very little household debt, and the finance industry has been maturing in a way that will suit their borrowing needs. Top that with repeated interest-rate cuts by the central bank, and you have almost perfect conditions for property purchases.
That is being reflected in prospects for next year. Bangalore and Mumbai are the top-ranked cities for prospects in terms of both investment and development, according to the 2017 version of Emerging Trends in Real Estate Asia-Pacific, put out by the Urban Land Institute.
They have supplanted Tokyo and Sydney, which had topped the popularity stakes for investors for the last three years. But investors are now searching for yield, something they are struggling to find in high-priced “gateway cities,” leading them to explore more speculative plays.