It looks set to be a bumper year for India in 2017 when it comes to real estate and the economy as a whole. That makes a marked turnaround for a persistent underperformer in Asia – India.
The nation has shot to the top of the list of preferred destinations for real estate investment in the eyes of major institutional investors. It is also the fastest-growing major economy, set for growth of 7.0% next year after this year’s projected 7.2%, according to Thomson Reuters.
That’s ahead of China’s 6.7% growth rate this year, expected to slow to 6.3% next year – almost a full percentage point below India. And it is greater domestic consumption that is driving India’s improvement, suggesting the middle class is truly coming into its own – and sure to demand housing to suit their tastes.
The recent highly controversial demonetization initiative to render higher-valuation notes worthless is designed to drive cash from the “grey economy” into the mainstream. That is likely to knock growth temporarily, with Nomura forecasting a two-quarter stalling period, knocking one percentage point off growth. But in the long run, driving “black money” into the real economy is likely another long-run driver of growth.
It’s about time. The world’s second-most populous nation has been a sleeper, particularly when compared with China. India’s 1.3 billion people isn’t far behind China’s 1.4 billion, and is expected to be the world’s most populous nation by 2022, according to the United Nations.