Why invest in India?
Why is India investment property so attractive? Of all the emerging markets that include Brazil, Russia and China, only India is set to sustain high growth into the second half of this century with its economy expected to be larger than Japan by 2023 and the US by 2042.
India’s largest cities New Delhi and Mumbai, will be the world’s 2nd and 3rd most populated by 2015 and in doing so will provide massive concentrations of retail sales potential. The Indian government has taken extensive steps to fuel the economic growth. Some of the measures taken to drive domestic demand over the last decade are -
1. Regulation Reforms driving economic growth.
2. High investor confidence driving Foreign Direct. Investment (FDI) in all sectors
3. Increasing consumerism driving domestic demand
4. Opened economy to trade and Investment.
5. Dismantled controls reduced bureaucracy
6. Encouraged private sector investment thereby reduced public sector monopolies.
Economic growth:
India is the 7th largest global economy in terms of Gross 9.40% Domestic Product (GDP) and has grown around 8% per annum in the last 3 years. The World Bank forecasts growth of the Indian economy in the next financial year is at 5.8% while the global economy is expected to slow down to 0.9%. The growth is being driven by continued performance of services sector. India maybe expecting growth in industrial production of up to 10%, up from 8.3% in 2007, with the India food market to grow 2 fold by the year 2025 revenues expected to rise to US$5.37bn in the next four years from US$1.6bn in 2008.
High Investor confidence:
FDI into India has grown at phenomenal rates for the last 2 years. AT Kearney 2007 Foreign Direct
Investment Confidence Index (FDICI) Ranks India at the second place. India is set to become the “nerve centre” for global sourcing with over 2/3 of fortune 500 and a majority of the Global 2000 firms leveraging global service delivery, now sourcing from India. India also ranks 2nd after China for preferred retail sourcing destinations.
Growth in the real estate and India Investment property sector:
Real estate and construction is a USD 16 BN industry in India, expected to grow at a CAGR of 30-40%. India and Global players have invested in the Indian market, thereby expanding the sale of operations. The margins in India are higher than other developed countries. Rapid urbanization and growth drives the demand in housing. In addition income levels provide consumers with higher affordability. 2/3 of India’s 1.1 billion population, is under 35 and they are now increasingly demonstrating an enormous appetite for consumer brands, as rising aspirations are matched with new lifestyle requirements which includes investment property.
UN estimates Indian urbanization to reach 34.3% by 2020 from the present 29.5%. This will result in an addition of 142 MN people to the urban population by 2020.
Urbanization together with the trend of nuclearization of families is likely to increase the demand for housing and inturn fuel the India investment property market. India has recorded 2nd highest growth in high net worth individual’s base. The growing consumer base, coupled with the affordability provides an ideal target segment the industry.
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