Profts in India
In July this year (2006) Indian steel magnate Sanjay Singhal paid 1.5 billion rupees (£17m) for a bungalow in Delhi, which was apparently just big enough for his immediate family. Sure, it's in the city's millionaires' row but the price illustrates the squeeze on residential and commercial property space in the sub-continent.
Real-estate agency Cushman & Wakefield say 400 new townships to accommodate 200 million people will be needed by 2011. The country's cities currently lack 12 million homes, while the commercial property market isn't much better. Despite its size and high demand, India has only 35million sq ft of office space, about a third of that found in London.
But the congested cities of Mumbai, Bangalore and Delhi, where property prices have tripled since 2004 and asking prices are rocketing, mean firms are searching for space further afield - to the suburbs and outlying towns. And investors are due to follow them. Some real estate services point out that yield gaps in Tier 2 cities, ie those with a population above 1 million (such as Hyderabad, Chennai and Pune), have narrowed to as low as 1% against their larger counterparts.
It's tricky to buy as a foreigner. If you wish to buy property in India as a private investor you must be resident and living in the country for more than 182 days, with the intention of staying. Alternatively, you can purchase property indirectly through specialist investors.
Although good quality commercial space is at a premium on the sub-continent, it should be noted that India is adding about 25% a year in A-grade office space, while rising interest rates could undermine yields. So while commercial rents and valuations rocket, it won't last beyond the short term.
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