India: Next property investment hotspot?

India could be the next stop for property investment opportunities in Asia as buyers look for alternatives following the recent slew of cooling measures in China. That is according to speakers at a property forum organised by NUS-Institute of Real Estate Studies yesterday.

GIC Real Estate managing director Goh Kok Huat said property prices in India had risen sharply following the liberalisation of the real estate market in 2005.

In the last five years, property prices have surged by 50 to 100 per cent, mainly due to private equity pouring into the country and exuberance among developers, he said.

Looking ahead, property prices could still grow by double-digit percentages as rapid urbanisation drives demand for housing.

Infrastructure upgrading could also see slum populations reduced from some 340 million to 93 million, signalling potential for growth in property demand.

“I would favour residential primarily because of the high rate of growth and urbanisation. I would favour office sector in key cities and I would probably stay away from luxury hotels and retail malls due to a huge supply in the short term,” Mr Goh said.

“As you go into the second and third-tier cities, your risk levels are going to be higher but your potential gains are also going to be higher,” he added.

However, experts warn foreign home buyers to take note of the country’s laws and policies before investing in an offshore property.

Local requirements can be very confusing, said professor Patricia Annez, non-resident senior fellow at the Brookings Institution. “You need to get a local advisor or a lawyer because there are overlapping jurisdictions.”

This could be further complicated by the presence of feudal system in southern India.

Prof Annez said: “The difference between India and China is that the State has much more control in China. In India, the state has some powers but it is a democracy and land is politicised. Anything to do with land, you have to be very careful.”

Industry experts also noted the country’s need to improve its infrastructure, and advise investors to check on the availability of basic amenities such as sewage, water and roads before choosing an investment property.

Source : Today – 17 Sep 2010

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