Top Real Estate Markets And Where India Ranks
India has been one of the prominent real estate markets on the global map and has been a tough competition to some of the most organised real estate countries in the world. With rising demand for housing, dipping unemployment rate, and strong economic growth, real estate has become stable in a majority of the First World countries despite a saturated market. While India's realty market has appealing returns to offer to global investors, other countries have a more stable market performance. Here is the brief report on how India performed when compared to other top realty markets of the world in 2016.
United States of America
The year 2016 seemed great for the US housing market as house prices continued to rise while the demand got strong and construction activities took a leap. According to Standard and Poor’s rating, the national house pricing index increased 5 per cent, marginally up from the previous year. The major US markets that saw the maximum annual appreciation were Portland, Seattle, Denver, Dallas, San Francisco, Tampa and Miami. According to the US census bureau, the median sales price of a new home in the country is $290,000. What may be good news for the American real estate is the fact that foreclosures and delinquency rates continued to fall in 2016. Apart from this, the US Census Bureau also recorded a surge in new home sales and were the highest since 2008.
With the change in leadership in the US and Donald Trump taking charge as the President, there is concern for the new year in the Middle East real estate, according to property consultancy Cluttons. While the property market here has been hit due to the fall in the prices of crude oil, inflation and housing finances are already under pressure in the current scenario. What can be the glimmer of hope for the Middle East realty is the Dubai market which has been one of the top investment destinations for 2017, according to the Cluttons survey. This has been because of its international recognition with the events like World Expo 2020. However, with dampened foreign investment from the US, the market has even seen five-year low in sales figure. Indian investment in the Dubai market outpaced Saudi Arabia, one of the key investor in the market. According to Dubai Land Development agency, Indians invested US$2 billion in Dubai Real Estate while Saudi Arabia put just US$544 million in the market. The sale price of an apartment also fell by 0.5 per cent while single-family homes price rose 5.6 per cent which is neither indicative not a market recover, as said by one of the top realtors of Dubai.
While London has been hailed as one of the top markets in the world for real estate investment, the rising housing prices in the country has been a delight for those who invested here earlier. The city witnessed a drastic surge in housing prices in the first quarter of 2016 when stamp duty surcharges were increased. This led to a 5.3 per cent hike in average housing prices in the UK to £198,564 which was credited to the fact that most of the second home owners were hurrying up their investments as the new stamp duty charges got applicable from April 2016. Those who wanted to avoid additional tax liabilities made the purchase which led to the increase in demand and ultimately its cost. Currently, a buyer has to pay 7.4 per cent of the purchase price as the stamp duty, other than another transaction cost. However, now the sales have shrunk to 782,000 units from 886,800 units since last year. Another thing which will be impacting the London property market is the fact that few anti-money laundering steps are expected to be taken as Panama papers highlighted the city real estate as the haven for black money holders and foreign investors who own property here will be under scrutiny.
Owing to struggling economy, high inflation and the unemployment rate, the South African real estate market is facing gloomy days. Although foreigners own three per cent of the South African properties which are growing side, investors are showing less interest in this market despite a fall of rand from ZAR 6.78 to ZAR 13.85. The possible reason being highlighted is the fact that the performance of residential property globally is weak which has also made it less popular as an asset class. Most of the current buyers hail from Europe and other African countries. Very recently, buyers from China and Dubai made a beeline here and have been eying properties in KwaZulu-Nata and Durban. Rules like strict documentation and declaration of funds remitted have kept black money away from this market which is another reason why South Africa real estate market is still growing as an investment hub.
With many positives and little negative, the Indian real estate has continued to attract foreign investors. With the Union Cabinet giving a nod to PR status to foreign national for 10 years and owning of a dwelling unit in the country, the outlook of foreigners towards India might change. Moreover, the prevalent corruption in the sector is expected to subside with the coming of stringent rules under Real Estate Bill, 2016, boosting the confidence of a real estate buyer. Cities such as Bengaluru, Hyderabad, Pune, Kochi and Mumbai which have been the hubs of multinational companies and are eye-candy for foreign investors. The cosmopolitan culture, high-end luxury living and availability of branded products have made India one of the top choices for NRI as well as foreign investors. Property experts are hoping that falling interest rate might save India’s residential market when the sales are crumbling due to high prices. However, the rental yields in India have been low as compared to other developed markets of the world. This suggests that properties here are overvalued which is not a healthy trend for any real estate market.
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