Chinese investors betting on South Asian country's real estate market

Updated 2017-05-22 10:01:23 Global Times

India's property prospectors

Many aspects of China and India have often been compared, such as the size of their populations and the pace of growth of their economies. Recently, many of the comparisons have dealt with their real estate markets. Is India's current real estate market similar to the one in China decades ago that helped the Chinese economy become the second largest in the world? The answer remains to be seen, but an increasing number of Chinese developers and investors are betting on the affirmative.

After her first few business trips to India, a Tianjin-based businesswoman surnamed Liu recognized something familiar in the South Asian country.

"It's like China in the 1980s," said Liu, who only gave her surname. "There are a lot of opportunities."

Liu, who works in logistics, sees a place for her business in India, but she has also identified a more enticing opportunity.

"The Indian real estate market is alluring, and I'm confident in its future," she told the Global Times Thursday. "The property market has great prospects due to the country's rapidly growing population and the soaring demand for land."

Liu has already started laying the groundwork for a real estate business in India. She has registered a company there and is on the cusp of purchasing land.

She is hardly the only Chinese investor who sees the potential of the Indian real estate market. Wu Shunhuang, CEO of Inworks, a Hong Kong-based firm that provides shared workspaces, is also optimistic about India's real estate market.

In 2015, Wu's company set up a subsidiary in New Delhi, India's capital. Since then, he has seen some ups and downs in the market. Right now, the market is recovering from the government's currency -maneuvering, which demonetized high-denomination bills.

After the ban took effect in November 2016, real estate demand slumped and home prices also plunged, said Wu, who noted Indians prefer to buy property with cash because taxes and fees are much higher if they borrow money from banks.

Still, the downturn didn't shake Wu's confidence in the Indian real estate market's long-term prospects.

"India's property market is poised to rebound and will have strong growth thanks to the country's enormous demand for infrastructure and higher living standards," Wu told the Global Times Thursday.

In recovery

India's property market also stands to benefit from rapid urbanization and an insufficient supply of residential and commercial real estate in one of the world's fastest-growing economies, analysts said.

"With such a huge market, the opportunities are obvious," said Jason Wang Chao, founder and CEO of Ventures in India, which helps Chinese companies invest in Indian start-ups.

India's real estate market had been in the doldrums around 2012, largely due to the influx of short-term speculative investments and the extremely high cost of fundraising, according to Wang, who has been based in India for several years.

But the situation has greatly improved since 2014, when -Indian Prime Minister -Narendra Modi's administration took over, Wang said.

"Real estate demand has recovered with the economy, especially due to the gradual increase in disposable income among the middle class as urbanization accelerated," Wang said.

The Modi administration's economic development plans such as "Make in India" and "Digital India" have stimulated demand for modern commercial and industrial real estate, Wang said. At the same time, there is an "extremely limited" supply of currency to meet such demand.

Similarities with China

Because India's rapid pace of urbanization and market growth resemble what happened in China over the last two decades, it's no surprise that Chinese investors, including some real estate heavyweights, have been drawn to the country, analysts noted.

In recent years, many Chinese developers, including real estate giants such as Dalian Wanda Group Co and China Fortune Land Development Co (CFLD), have entered India's real estate market.

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