India: Investment Potential

India: Investment Potential

Property investors have watched India's explosive economic progress with interest over the last few years. The country is one of the world's largest and fast-growing free market democracies and tourism plays a key role in its wealth. India enjoys annual tourism growth of between 18% and 20% and is currently experiencing an economic boom.

India's Economic and Tourist Boom

According to the Organisation for Economic Co-operation and Development (OECD), India is currently the third largest economy in the world in terms of real prices and purchasing power and the country's economic boom looks set to continue. The government has pledged to ensure continuing stable tourism growth and the World Travel and Tourism Council predict that tourism related employment will rise to 28.3 million by 2017.

Increased Foreign Investment

Despite a slow start to foreign direct investment (FDI) into India's property market, a number of foreign construction and housing groups are establishing themselves in the country and a large portion of that investment is being put into residential and commercial real estate projects.  Large investments in India have been made by Morgan Stanley, Citigroup Property Investors and JP Morgan.

India Rental Yields

With a current value of $50 billion, India's buy-to-let and commercial property investment market is due to become the single largest business sector in India with forecasts of 25% growth rates. A property analyst at India Property Auction says that "demand for accommodation is ever increasing....renting accommodation is good business and the returns are amazingly high." Rental yields vary throughout India with Bangalore showing high rates of just under 10% and New Delhi ranging between 4% and 8.4%. Mumbai yields tend to be lower at just under 4%.