India - An Economic Leader in the Making

Based on various studies conducted across the globe, economic experts envisage that India and China will be the dominant economic powers of the world in the 21st century. For the past one hundred years, the United States has been the worlds largest economy, but major developments such as Globalisation have lead to the shift of focus from the US and the rich countries of Europe to the two Asian giants - India and China.

India is currently creeping up on China to obtain the accolade of fastest growing economy in the world. Eight years ago, based on growth rates of 5.3-6.1%, Goldman Sachs predicted that India would become the 3rd largest economy on earth by 2035. However, the current figure has accelerated to an unprecedented 9.4%, and the country is now preparing to be to be the world’s third largest economy by only 2010.

Services are a growing sector in India and are playing an increasingly important role in the economy. The advent of the digital age, and the large, highly skilled, English speaking workforce is gradually transforming India as an important 'back office' destination for global companies in terms of outsourcing of customer services and technical support. India is a major exporter of highly-skilled workers in software and financial services, and software engineering. Other emerging sectors which show high potential include manufacturing, pharmaceuticals, biotechnology, nanotechnology, telecommunications, shipbuilding and aviation.

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• India produces 2.5 million graduates each year

• Average disposable incomes are increasing by 8-10% per annum

• The middle-class is set to expand to 300million by 2010 – larger than the USA

• 255 Fortune 500 companies source their resources from India

• The current population of over ONE BILLION people is set to grow by a further 400 MILLION over the next 25 years

Real Estate

Since the 100% relaxation of Foreign Direct Investment regulations early last year, the already burgeoning Indian economy has been further boosted by a veritable explosion in real-estate. As a result, a sense of confidence has been infused amongst investors from both within India and abroad which has further augmented the investment potential.

“India’s real estate investment market is rapidly growing and following the relaxation of FDI regulations, the country is attracting substantial interest from cross border real estate investors.” Jones Lang La Salle, 2006

The residential property market is currently experiencing exponential growth across India, particularly in urbanised areas and those in close proximity to the government’s new Special Economic Zones (SEZ’s). Indeed, according to the Bank of Baroda’s Chief Economist, property prices have appreciated by “...as much as 60-100% over the past 12 months” in most regions. India promises high return on investments for any local or foreign investors, and due to its liberal and attractive FDI policies, India has witnessed a sudden boom.

• “Property prices in India are rising fast…” – Fortune magazine

• Indian Real Estate Sector estimated to rise from $12billion to $90 Billion by 2015 - Merril Lynch)

• Subsequent year on year capital growth of c. 25% (200% in 8 years)

• Government estimates a housing shortfall of over 20 million homes (Jones Lang La Salle 2006)

• Growing mortgage market - declining interest rates have made property more affordable despite actual price increases.

• Home loans market is growing 30% year on year.

• 55% of India’s growing population are under 25. The average age of new homeowners has dropped from 45 to 32 in 10 years.