JULY & AUGUST 2012 |
www.opp.org.uk
Even with 80% loans freely available, many investors are looking for property at the bottom end of the market. These will be two-bedroom properties in the lesser-known cities and will cost in the region of $90,000. Those with deeper pockets and greater aspirations will be looking at prices of $900,000 or more. For this you might buy a fi ve-bedroom, 3600 square foot apartment in Mumbai. Proposed changes in India, including freeing up the market to foreign investors and making the rupee a convertible currency, are further boosting demand. According to
“Many Indians buy ‘off plan’. In a rising market they can see savings of 40% by buying in this way ”
Manish of K Rheja Corp – who build in Mumbai, Puna, Bengaluru and Goa – prices in Mumbai have gone up from 800 rupees per square foot 15 years ago to 9,000 rupees per square foot today. He thinks prices will rise further. So, is this a classic property bubble? I doubt that prices can continue to rise at this rate, but with the rupee standing at 55.6 to the dollar, 9,000 rupees per square foot is only $160 and, with a vast and rapidly growing population with a massive and growing
EVENTS
divide between rich and poor (with the rich being the buyers), there looks to be some scope for further growth. Interestingly, the mortgage debt to GDP ratio is only 8%. This is one of the lowest in the world. In places such as the US, the Netherlands, Denmark and the UK it is well over 80% and even in Germany it is 46%. This does not suggest a credit-fuelled boom. Should foreigners be looking to
invest? This is not straightforward at the present time. Foreigners cannot freely own property in India, although some have found ways to buy via local companies and local partnership. In these cases, local mortgage fi nance will not be available. Finally, my personal pick from the
show. This is the property that I thought was most interesting, not necessarily the one that would be the best or the most beautiful investment. Isha Homes is building 106 eco- friendly villas in Chennai. Chennai is a city with acute water and energy problems. Every drop of water falling onto the Isha Mia Villas development is harvested and every drop consumed within it is recycled. Using a combination of solar energy and wind power it is 100% self-suffi cient in electricity. All of the solid waste is recycled. Every house has a built-in charger for an electric vehicle and non- electric vehicles may be banned from
WISH YOU WERE THERE? | 39
the site. It has a communal herb garden – and every buyer is given a bicycle when they buy a property! Of course, it is built out of eco-friendly and certifi ed sustainable materials. Interestingly, according to the developers, all of this adds only 10-15% to the cost of building the project. The price? Three-bedroom, three-bathroom houses with a build area of 2,076 square feet (192 square metres) start at 1 crore rupees – 10 million rupees or about $175,000. This is a price of 2,700 rupees ($84) per square foot. Their buyers have, so far, been
mainly NRIs living in the US. They’re buying for their own use in later life or for occupation by their parents. Surprisingly, very few seem to be buying as an investment. This is despite the fact that according to Mr Haree of rival company VGN, growth in Chennai has been 30% since 2007. With this sort of pricing and the ability to live well on an income of $500 per month, it is no wonder that so many are looking to go back to India. The question is, will the government open the doors and encourage retired ex-pats to do the same?
Land of opportunity | many NRIs are choosing to continue their careers in India
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