India Property
The Indian Property Market is purported to be in bubble territory since March 2005, when the current UPA government decided to open FDI in Real Estate. This "FDI" rules ensured that Indian money stacked in Switzerland and other tax havens can be brought back to invest in high yielding Indian property market, away from low-yielding dollar assets. Other evidence that the Indian Property Market may be in a bubble is the Adarsh Scam, where politicians and property developers were in collusion to hoard property to ensure that the property would be sold to users at high rates.
Some have suggested that given India's population density is closer to that of Europe than that of America the real value of Indian Real Estate should be close to European levels rather than American levels. When looked at in that way Indian real estate is still cheap. This argument assumes the rapid economic growth in India will have brought per capita income in India to Western European levels within the next 10 years in urban areas.
Contra argument to this is US prices should ideally move with economy/inflation rate of 2–3% while Indian prices will gallop at the rate of 10% a year and probably more as the land distribution market is inefficient. This price increase is mostly due to two reason – one primarily in most cases the developers create false claims of overbooking and increase the demand and price and the other reason most of time properties are bought sold within 6–12 months from one buyer to other. There is no system available to the public to track these sells or buys. In US there are lot of real estate website provide the details buy and sell details , what is fair value, when the house was built, how many houses are on sale,etc...
The other factor to consider is cost-to-facility ratio, in Mumbai a 2 bedroom apartment with living space of 1,200 square feet (110 m2) or 1,400 square feet (130 m2) of build up area will cost about 60 Lakhs to 1 Crore or even more, same for other major Indian cities Chennai, Bengaluru, Hyderabad, Pune , Gurgaon,etc.. . Where as in US, Australia, UK or France a 3 bedroom/2.5 bath townhouse which is at least 2,000 square feet (190 m2) around most of metros( other than Manhattan and Los Angeles ) will cost between 250,000 USD to 500,000USD which is between 1 Crore to 2 Crore Rs. This houses have parking garage, back yard and with basic Kitchen setup including cabinets, refrigirators, washer and dryer and for higher range may include a private swim pool, basement, front yard. In these western countries average salaries are almost 8 times the Indian salaries but cost of house(For a much better house) is only double. Also, compare what you get for your money in Europe or United states with the situation in Indian cities as evidenced by perusing the real estate advertisements. Phrases like "ample water supply" " well ventilated" " with backup generators for power supply" are littered in almost all of these ads. Bottom line is you get basic amenities that are taken for granted in the west for a premium price. Also the Interest rate paid by indians is almost double that of there developed country pears makes the EMI paid on par with developed countries in many cases.
