With a population already over 1.18 billion people, as the world’s largest democracy and with an economy moving forward at rapid pace, it is hardly surprising that the number of wealthy Indian’s is increasing, as is the size of their wealth. Given India’s demographic growth and shift, it is expected that over two million houses will be need just by 2011. This is a potential market of $66 billion USD. And that’s just for starters!
In fact, the number of households defined as “rich” will have risen from three million in 2003 to 11 million by 2013. Additionally, the number of middle class “aspirers” is expected to increase even more substantially, from 46 million to 124 million in the same period.
Right now, India has around 130,000 high-net-worth individuals (people with investable assets of more than $1 million USD) and this rate is growing at 20% a year, which is second only to Singapore, but of course the comparative actual population numbers are poles apart.
So, where does real estate fit into the portfolio’s and plans of the wealthy.
Whilst the majority of the wealth tends to be invested in stocks, bonds, and mutual funds, a quarter of their wealth portfolio is invested in real estate, thus making real estate a significant asset class.
In fact, the love of real estate investment amongst Indian’s is growing at a rapid rate.
As an asset class, whether it be residential or commercial property directly, or property funds specializing in office space, malls or industrial parks (where a minimum of five million rupees, or approximately $100,000 USD investment is required), the lure is certainly growing, indicated by the Mumbai residential market growing by 11% in the 2009 calendar year (the seventh highest growth rate globally, according to Knight Frank & Citi Group).
Additionally, an increasingly popular investment is buying off-the-plan (the entire plan that is), and then selling on completion with (hopefully) a significant mark-up. This requires in excess of 1 crore Rupees (approximately $200,000 USD).
Despite recent hiccups in the global market and the fact that non-Indian’s are unable to invest in Indian property, with the numbers of wealthy Indian’s growing (both at home and overseas – a huge community in itself) at a phenomenal rate, there’s going to be plenty of opportunities that they’ll be seeking out.