housing sector is likely to fare better than China's, as
investors are upbeat on India, said the global head of an
international real estate consultancy firm. During recent
meetings with investors we got this feeling that as of now
they are more comfortable investing in India than in China
said Patrick Ramsay, global head, residential real estate,
Residential real estate prices in China and India are increasing,
especially in cities such as Beijing, Shanghai, Mumbai and
the National Capital Region (NCR). There are also indications
of a price bubble in these cities.
"If you compare India with China, the group of high
net worth individuals (HNIs) is smaller in the latter. HNIs
invest as much as 40 per cent of their wealth in residential
real estate according to our research," said Ramsay.
However, prices will not increase but will not reduce substantially
also in the short run, Ramsay said. There is a demand-supply
gap that prevails in India, which according to industry
experts is the main reason for the price rise in the last
one year. On an average, prices have gone up by 30-50 per
cent in Mumbai and NCR.
reasons are being considered for increase in realty prices
in Beijing, though things are different in China.
Unlike India, there is an entry restriction (for people
from outside city) in Beijing and an embargo on who can
buy property in the city. On February 16, the government
announced that homebuyers would be subjected to restrictions
and officials are talking about making hukou -- the domicile
certificate that is needed to buy property -- even more
difficult, The Economist said in a recent issue.
Despite this, there is still a huge demand for residential
properties with fears of a property bubble lurking. When
asked whether a bubble is developing in Beijing and Mumbai,
Ramsay said, "The high-quality developments in Mumbai
and Beijing are limited and the demand is still there. On
the other hand, if funding slows down (as reports suggest)
it will only slow down the supply."
Traditionally, the number of transactions in residential
real estate is more in bigger cities in India when compared
to China. The prices of residential properties in most expensive
areas in India are higher than similar areas in China.
Source: Feb 25th 2011, Hindustan Times