PROPERTY ON THE GOA IN INDIA

The Gardens project in Bangalore being built by Dubai developers ETA Star.

The Aamby Valley City, one of the biggest property projects in Northern India

It is one of the largest countries in the world and could also soon be one of the largest property markets too, reports Shane McGinley.

The services industry in India is well renowned in Ireland and many of us have now become used to being transferred to Indian call centres when we call a major supplier or multinational with a query. However India is also one of the largest markets in the world so should not be easily overlooked when looking for an investment. Capital values and rentals have seen an appreciation of more than 30 - 35% leading up to 2006 and are currently holding steady. Prior to this, appreciation levels of closer to 5 to 10% were reported.

Economic Growth

The reason for this increase, according to Poonam Mahtani, manager of the Colliers International office in Mumbai, is largely due to increased economic growth, supply limitations in key residential areas, low housing loan interest rates and higher taxation on employee house rentals.

India is a massive continent in a country. It is the largest democracy in the world, at 3,287,590 sq km it is the seventh largest country by area and with in excess of 1 billion people it has the second largest population. There are therefore variations in the returns that can be seen, but Mahtani recommends that the big cities are “definitely the highest in real estate pricing and Mumbai is the highest in terms of capital values, followed by Delhi, Bangalore and Chennai.” The tier two cities, including Pune, Hyderabad, Chandigarh and Ahmedabad are lower in terms of capital value.

Investment Opportunities

From an investment perspective while Mumbai does offer good returns it is considered one of the most expensive real estate markets in the world so for buyers it might not be within everyone’s wallet range. When looking to India most buyers focus on the tourist magnet that is Goa. This small state has become popular both as a tourist destination and a retirement location due to its very low cost of living. The former Portugese colony is very European in nature and very unlike the rest of India.

Dotted along the coast there are also a number of smaller resorts along the idyllic tropical coastline, which can offer homes for potential investment buyers. The most popular include Anjuna, Margoa, Panji, Cavelossim and Palolem, with the number of proposed developments increasing all the time. “Tourism in India has a come a long way from the days when an epidemic outbreak in one corner of Gujarat created such paranoia that tourist arrivals across the country took a nosedive,” Amitabh Kants of Tourism India told the India Times News Network in an interview.

Tourism Growth

In 2005 Kants reports that tourism in India grew by 26% in value terms and 36% in value terms. For the first time tourism levels passed the 3 million mark and have created nearly 5 million jobs. “The critical point here is that tourism should be seen among the major drivers of economic growth and employment generator,” says Kants. India plans to raise the number of visitors to 5 million but Kants also wants to attract more high net worth travellers. “Earnings must double from the present base within these three years. I would rather settle for lesser number of people coming in, than those who bring high value to our economy. So we need to focus on value rather than volume.”

In India nearly 10% of the population are unemployed and 25% live below the poverty line. Therefore while the economy is growing the government does not have the budget to carry out a massive overhaul of the tourism infrastructure. Therefore the government has set up a scheme to attract outside support form private investors.

In order to qualify for the grants available proposals must be “a project, which is also a tourist attraction, or used by tourists and generates revenue through a levy of fee or user charges on the visitors.” These include tourist trains, cruise vessels, cruise terminals, convention centres or golf courses. Hotels and restaurant are only permissible if they are part of an overall project and not the dominant feature. This scheme is likely to be welcomed by British investors looking for an entry into the Indian market.

The Gold Coast

“Goa has become very popular as the people of Goa are literate and can freely communicate in the English Language,” says Porus Adi Doctor of Lifestyle Homes Goa. In terms of property he reports that “independent villas, which have garden space surrounding the house, with a lot of greenery,” are most in demand. Goa is today considered as the Gold Coast of India, amongst many developers around the world and many are snapping up land along the coast.

For rental return the average you can expect in Goa is approximately €6,000 a year for a well furnished 2-bedroom home, however some agencies are advertising properties in Goa from as little as €25,000.

INVESTMENT NEWS

Flight Watch: Romania & Poland The heart of Bucharest – the capital of Romania Low cost airlines flying into new markets has become increasingly important for property developers and agents as accessibility is a key factor for buyers and in attracting tourists to the area. In October Ryanair announced new routes from Shannon to Lodz in Poland and from Dublin to the Polish capital of Warsaw. With Romania due to become part of the EU in January it was also reported in the local Romanian press that as part of a multi-million Euro upgrade of its airport facilities the airport authorities were in discussion with low-cost operators, such as Ryanair, to increase the number of flights into the country. Increased access should further develop the countries growing property market. Aer Lingus also announced new routes from Dublin to Athens, Newcastle and Milan-Malpensa for next summer and from Cork to Manchester, Madrid and Prague. Buyers Slam French Agents A poll carried out by a French property website has found that foreign buyers in France think French estate agents are over-paid and provide poor levels of service. The survey carried out by www.creme-de-languedoc.com found that by a margin of 3-to-1, respondents felt that ‘French estate agent commissions are daylight robbery’. A small majority also feared that French estate agents inflate prices for foreign buyers. So in terms of value for money, buyers felt agents were hugely over-paid. However overall, despite reservations about estate agent commissions and low levels of service, respondents were very optimistic about the value that property in France offers. Turkey Still Tops The Charts In October the first ever ‘Global Emerging Markets Index’ was launched to track in which direction buyers’ money was flowing. The index, based on the number of foreign exchange transfers undertaken by Currencies Direct found Turkey was leading the way – with Bulgaria and Dubai not far behind. Buyers appear not to have been put off by recent terrorist attacks and most buyers were at the Aegean and Mediterranean coasts. In the UK alone the number of people buying Tukish homes has jumped by 200% in only eighteen months, helped no doubt by the relaxation of restrictive Turkish property legislation. The Index excludes established overseas property markets such as Spain, France and the US and found that after Turkey the next most popular emerging markets were Bulgaria, Dubai, Thailand, Cape Verde, Czech Republic, Slovakia, Hungary, Egypt and finally Poland. AIPP Launches Consumer Guide To help buyers navigate the unregulated world of overseas property the Association of International Property Professionals (AIPP) has produced a 64-page Consumer Handbook and Members Directory. The guide helps buyers through the purchasing process, introduces them to approved AIPP members and includes country guides to 32 of the most popular overseas property destinations. To receive a free copy call 0044 20 7409 7061 or email enquiries@aipp.org.uk.