INDIA
India, with a population of 1 billion, is the second largest country in the world behind China.
Given that the population is contained in an area roughly one-third the size of the U.S.,
there are many dense, highly populated urban areas. The Indian economy weathered the
1997-98 Asian economic crises fairly well, maintaining an average GDP growth rate of 5.4%
over the past five years. Nominal GDP reached US$498 billion in 2001. The government is
moving more towards privatization, having recently sold a major automobile manufacturer
and the country's international telephone company.1 With lessening restrictions on foreign
investment, FDI inflows are increasing. While specific numbers for real estate are not
available, the U.S. invested US$179 million in "finance/insurance/real" estate in 2000. 2
Despite a positive economic outlook, the current standoff with Pakistan has created a "waitand-watch" situation for many international investors.
On the average, nearly 40,000 Indians immigrate to the U.S. each year, with an additional
75,000 entering the country as temporary workers. Around 800,000 Indians currently
reside in the U.S. Recent estimates suggest that up to 80,000 U.S. citizens may currently
live in India.3
Major U.S. multinational real estate firms operating in India are Cushman Wakefield,
Colliers, Jones Lang LaSalle, and Chesterton Blumenauer Binswanger.
Knight Frank and Colliers (report 1, report 2) provide general reports on the Indian property
market.
Delhi
Delhi, the capital of India, is also the third largest city. One point seven million households
house the city's 11 million residents. Sixty three percent of homes in Delhi are owner
occupied. Northwest Delhi, with a population growth rate of 5.8 percent in 1999, is the site
of most new development.4 Despite an already strained infrastructure, Delhi has emerged
as the city in India most capable of handling growth in every sector of real estate. 5
Residential housing prices in Delhi have been stable since the end of 2001. After peaking in
1997, housing prices fell by as much as 50 percent in some areas of the city. They have
since leveled off at around US$335-670 (2002) per square foot for grade A housing near the
city center. The popular suburb of Gurgaon fetches prices in the US$58-106 per square foot
range.6 Gurgaon has become a popular location amongst mid-level executives who work at
the many corporations that have recently relocated there. Upscale apartments and
condominiums are the most common style of residence in the area. While increased
commercial activity in these suburbs has created an increase in demand for housing, many
areas lack the social infrastructure (schools, hospitals, and shopping areas) to realize their
full housing development potential.7
While Delhi is one of the largest markets in India, there is a shortage of quality retail space.
Demand remains strong for average sized shops in prominent locations such as South
Extension, Connaught Place, and Greater Kailash. Many major retail brands are targeting
the suburban regions for future development, with many retail/entertainment complexes
under construction.
Connaught Place is considered the central business district of Delhi. Secondary business
districts include Nehru Place and Bhikaji Cama Place in south Delhi. Suburbs, such as Noida
and Gurgaon, are popular locations for corporations with large space requirements. The
office market peaked in 1996, with prices trailing off through 2000. They have remained
stable since mid 2001 at around US$15-23 per square foot per year in the CBD and US$9
per square foot per year in Gurgaon.8
Cushman Wakefield, and Chesterton Blumenauer Binswanger provide detailed reports on
the Delhi commercial and residential real estate markets.
Mumbai
Mumbai, formerly known as Bombay, is the largest metropolitan area in India. Containing
nearly 18 million people, Mumbai is the commercial capital of India as well as the country's
busiest seaport. The population density of the area is a staggering 40,000 persons per
square mile. Accordingly, apartments are the dominant style of housing, with single-family
bungalows in short supply. Fifty one percent of homes are owner occupied and 6.4 percent
are rentals. Squatters living in illegally constructed dwellings occupy the bulk of the
remaining housing stock.9
Residential property values in Mumbai peaked in early 1995. Following a period of decline,
they have been relatively stable since the end of 2000. As the central city becomes more
congested due to the high influx of unskilled workers, the suburbs have become popular
among many first-time homebuyers. Developers are constructing the advanced
infrastructures required to meet the growing demand for suburban residences. Property
values, as of 2002, were US$210-380 per square foot in South Mumbai, US$144-277 in
Central Mumbai, and US$133-216 in the suburbs.10
Traditional prime retail centers in Mumbai include Colaba, Churchgate, Kemps Corner, and
Linking Road. The trend, however, is moving away from small retail shops and towards
large malls with integrated entertainment establishments. In 1999, monthly rental rates for
Crossroads, Mumbai's first mall, were identical to the rates for prime retail areas at US$5.75
per square foot.11
Many companies in Mumbai are turning to the suburbs for low-cost, high-quality, contiguous
office space. The areas of Bandra-Kurla and Andheri-Kurla are emerging as popular
suburban office locations. Office space in traditional business locations, such as Nariman
Point and Fort, is more expensive and often not poorly maintained. 2002 Monthly rates for
office space in the central business district of Nariman Point range from US$1.85 to 3.60 per
square foot. Monthly rates in the suburb of Bandra-Kurla range from US$1.85 to $2.47,
while rates in the suburb of Andheri-Kurla range from US$.88 to $1.75.
As of March 2001, the state government has released 570 acres of idle land, formerly
occupied by once-prosperous cotton mills, just north of the commercial core of Nariman
Point. The release of this land, measuring twice the area of the current CBD, could
potentially lead to lower land prices in central Mumbai. The land will be divided into three
equal sections for public space, low-cost residential housing, and independent development.
Many developers see opportunities for large-scale retail centers not formerly possible on the
crowed peninsula.12
Cushman Wakefield, and Chesterton Blumenauer Binswanger provide detailed reports on
the Mumbai commercial and residential real estate markets.
Bangalore
Bangalore, with a population of 5.3 million, is known as the "Silicone Valley of India". The
population grew very quickly in the 1990's due to the influx of many multinational
corporations. Despite the rapid population growth, Bangalore is often considered India's
best city to live and work in. Bangalore is well connected to the rest of India by road, rail,
and air. Plans to build a new international airport are currently in the works.
The residential real estate market in Bangalore offers a wide variety of housing
configurations, including apartments, independent dwelling units, and residential plots.
Apartments have become popular in the last 15 years, but large complexes are still not the
norm. Many buyers prefer low-rise residential buildings. Fifty five percent of the homes in
Bangalore are owner-occupied. In 1999, the price per square foot for apartments in prime
residential areas such as Richmond Town, Langford Town, and Cunningham ranged from
US$27.60 to $80.45. Secondary areas like Kramangla, Indira Nagar, and Malleswaram
commanded prices in the US$18.40 to $30 range. Land is available for new residential
development, with permits granted based on compatibility with Bangalore's Comprehensive
Development Plan.
Organized retail is being realized in Bangalore, with many large retail chains testing the
waters before committing to large-scale ventures. In 1999 monthly rental rates in prime
locations ranged from US$1.40 to $2.30 per square foot. Monthly rates in secondary
locations range from US$.80 to $1.15 per square foot.
The influx of IT companies in the 1990's grew the Bangalore office market substantially.
Rental rates peaked in mid 1996, but have now stabilized at levels about 15-20 percent
lower. Two thousand and two monthly rental rates in the CBD average about US$1.03 per
square foot. Rates in suburban locations average about US$.66 per square foot. 13 The
trend in new office development is towards "high-quality efficient space targeted at IT
companies relocating to the suburbs".14
Cushman Wakefield, and Chesterton Blumenauer Binswanger provide detailed reports on
the Bangalore commercial and residential real estate markets.
India has been a federal republic since January 26, 1950. The government consists of an
executive, a legislative, and a judicial branch. The executive branch contains the president,
who serves a five-year term, the prime minister, and the Council of Ministers (cabinet). The
presidency is a largely ceremonial position, with real executive power lying with the prime
minister and the cabinet. The legislative branch is made up of two bodies, the Rajya Sabha
(Council of States) and the Lok Sabha (House of the People). The Rajya Sabha is made up
of 245 members, with 233 elected by the states and union territories and 12 appointed by
the president. The Lok Sabha is made up of 543 elected members and 2 appointed
members.
India is made up of 25 states and 7 union territories. Each state has a presidentially
appointed governor. While the states are more autonomous than the union territories, local
governments generally have "less autonomy than their counterparts in the United States".
Prime Minister Atal Bihari Vajpayee has been in office since October 1999. A member of the
National Democratic Alliance, his election reflects the transition in Indian politics away from
the historically dominant Congress Party toward smaller regional parties.15
The Indian real estate industry, although very large, is very informal. There are an
estimated 110,000 real estate brokers in India, completing tens of thousands of
transactions each year. There is no national association that represents brokers, nor is
there a licensing requirement. Listings are nonexclusive and are shared informally. There
are almost never written agreements between brokers regarding listing, co-brokering, or
referral agreements. These agreements are based on trust and oral commitments. Many
brokers operate as sole proprietorships. While there is no central MLS in India, websites
such as indiaproperties.com and propmart.com offer their own web-based listing services.
Indiaproperties.com also offers the only organized, national real estate broker education
program.
Typically, a broker will ask for a 2 percent commission from each side. This percentage can
be larger for smaller deals and smaller for larger deals. Due to the informality of these
agreements, it is common for a broker to experience difficulty in collecting commission
payments. Real property records are kept at the Registry of Assurance.
The University of Denver offers detailed information on some of the legal and financial
issues involved with owning property in India.
Find a real estate professional who specializes in India
According to the Foreign Exchange Management Act (FEMA) of 1999, foreigners cannot own
property in India without approval from the Royal Bank of India (RBI). It is considered
difficult for foreigners to get permission to own property in India. Nonresident citizens of
India or persons of Indian origin, however, are allowed to acquire property in India without
government permission. Foreign corporations can own property in India, given that they
have an office or branch in India. Approval from the RBI is required.
The Royal Bank of India provides a detailed document outlining the official policy regarding
foreign ownership of property in India.
Price Waterhouse Coopers provides a detailed report on the tax requirements of nonresidents owning property in India.
Association Activities
Until recently, there was no national organized real estate activity in India, but rather
limited activities at a local level. In 2000, NAR was approached by an Indian national, who
has trained and worked a number of years in the US as a broker for a large US franchise.
His interest was to develop some type of partnership with NAR in order to raise the level of
professionalism in India and to help establish the brokerage profession in a positive light
among consumers.
After exploration of the current state of organized real estate in India, NAR signed an
agreement in 2001 with a company, who's core business is online property information and
has national presence, to spin off its strong education arm into a nonprofit organization.
This occurred in March of 2002 and the new entity was incorporated as the India Institute of
Real Estate (IIRE). NAR, with support from the International Real Property Foundation,
continues to work provide association development assistance and support the public launch
of IIRE. Education will continue to be IIRE's core service. In may of 2002, NAR's Board of
Directors approved entering into a nonexclusive bilateral agreement with IIRE, pending all
criteria for such agreements being met. It is anticipated that a bilateral agreement will be
signed during the 4th quarter of 2002.
General
U.S. Embassy in India
Indian Embassy in Washington
Overseas Private Investment Corporation (lots of good links)
U.S. Commercial Services - India
CIA World Factbook
Real Estate
indiaproperties.com (FAQ on buying property in India)
propmart.com (another FAQ on buying property in India)
University of Denver Global Real Estate Project - India
International Real Estate Digest - India
Reserve Bank of India (information on foreign ownership of property)
Find a real estate professional who specializes in India
1
"Marching On", The Economist, June 27, 2002.
"2001 Country Reports on Economic Policy and Trade Affairs--India." U.S. State Department.
3
Mount, Mike. "U.S. Plans Mass Evacuation From S. Asia", cnn.com.
4
Mathur, Madhulika. "Delhi Metropolitan Area." ULI Market Profiles 2000.
5
Ibid.
6
"Residential Snapshot New Delhi - India". Cushman & Wakefield, January 2002.
7
see note 4.
8
"Office Snapshot New Delhi - India". Cushman & Wakefield, May 2002.
9
Mathur, Madhulika. "Mumbai Metropolitan Area". ULI Market Profiles 2000.
10
"Residential Snapshot Mumbai - India". Cushman Wakefield, January 2002.
2
11
See note 9.
Slater, Joanna. "A Development of the Heart". Far Eastern Economic Review, May 17, 2001.
13
"Office Snapshot Bangalore - India". Cushman & Wakefield, May 2002.
14
Mathur, Madhulika. "Bangalore Metropolitan Area".
15
"Background Note: India". U.S. State Department, March 2000.
12