Assetz® News - Where India offers long-term benefits

Where India offers long-term benefits

6th June 2007 |

Property in India is popular. With its booming economy, increasing tourism and ever-improving infrastructure, there is no lack of interest from investors. For this reason, the Confederation of Real Estate Developers Association of India and Maharashtra Chamber of Housing Industry have announced the dates of India Property 2007, a show held in Dubai and London to promote investment in the country.

The first question many will ask is where in India should people invest? No doubt the question will be asked in London when the show comes to Earls Court in late July. But to Investors Provident much depends on the markets the investors, particularly buy-to-let investors, are seeking to tap into.

Investment Provident spokesman Hetal Shah explains that, for example, Goa, a popular holiday destination and home for ex-pats, has "probably [been] done and done, especially the more popular tourist areas in the north of Goa."

He adds: "If you're looking at [Goa] as a holiday home, you can't really miss out, in the long-run. But if you're looking at it from an investment point of view, then there are a lot of other areas."

The long-run is a theme Mr Shah emphasises, explaining that first of all, an investor has to undertake the "tedious" process of circumnavigating India's property laws. Foreigners cannot own property themselves, so investors need to set up a company in India first, with any property bought registered under the company name.

However, he adds, once this is done the long-term prospects are good. The "other areas" he refers to are not the already popular, saturated and increasingly expensive holiday resorts, but the fast growing cities where new industries and high technology are bringing about rapid change: "Areas like, for example, Bangalore, Hyderabad, where you've got.the IT sectors, you can't go wrong with those. And definitely the metros: you've got Mumbai, Delhi."

He explains that these locations were costly, but adds: "You can't go wrong because it's like investing in London; you'll just never go wrong in the long-run."

Another clue to where to invest has emerged today, with the BBC reporting that the Indian government has agreed for 24 Special Economic Zones to be set up around the country. The scheme essentially copies what China has done; creating areas of tax-free investment where big companies will be encouraged to move in. These, therefore, should be the areas where the next wave of technology and industry come into the country.

These zones will not come into force just yet. MK Venu, national editor of the Economic Times, told the BBC that large areas of building land need to be acquired for the projects, which in turn means overcoming resistance from rural communities wedded to an agricultural lifestyle. But when this does happen, investors may do well to look to these areas for the big opportunities.

Thus the message is clear: India is a place for the patient and those looking for long-term returns rather than a quick buck. But of course if the country continues to see such rapid economic growth then a long-term investment means long-term success.