Singapore: India is all set to overtake China as an attractive property investment destination just as valuations of property investments in China are declining.
The property price index has been growing steadily in India in the past few years. The All India House Price Index (HPI) published by the Reserve Bank of India (RBI) grew at an annual rate of 3.5 per cent for the quarter which ended in June (Q1: 2022-23), expanding 1.8 per cent compared with the previous quarter.
In an interview with Nikkei Asia, CLI said it plans to diversify its portfolio and is looking out for investment opportunities in Vietnam and India. The aim is to build resilience in areas like supply chain and energy amid shocks to globalisation seen during the COVID-19 pandemic.
CLI whose largest shareholder is Singapore state-owned investor Temasek Holdings is one of Asia’s largest real estate investment managers with USD 90 billion worth of property assets and USD 63 billion in funds under management.
“We would love to do more in Vietnam, we are already very active in India,” said Chief Financial Officer Andrew Lim to Nikkei. “What recent events have told us is that it’s probably dangerous to put all your eggs in one basket… in an era when globalisation is increasingly being put to the test.
Lim thinks that Vietnam in the post-COVID era will emerge as an important destination for capital, especially regarding manufacturing. Whereas India has tremendous solar resources. “These are markets if you are looking for energy redundancy, energy resilience, renewable energy sources, suddenly it becomes important from that perspective.”
Meanwhile, all is not well in the Chinese property market.
Last week, the Chinese government released data that showed that new home prices fell at their fastest rate in over seven years, while property sales measured by floor area fell for a 15th straight month in October.
Based on data from the National Bureau of Statistics of China, for the year-to-date period till October, investment in real estate development fell 8.8 per cent compared with the same period in the previous year, commercial floor space sold dropped 22.3 per cent, while revenue from commercial buildings sold plummeted 26.1 per cent.
Although China is now taking measures to revive its property sector, real estate investment firms like Singapore’s CapitaLand Investment (CLI) which has a third of its assets in China are looking to diversify their portfolio. Vietnam and India were cited by CLI as possible destinations for future investments.
With the property sector accounts for about a quarter of China’s USD17 trillion economy, concerned Chinese authorities have introduced measures over the past months to inject confidence back into the collapsing sector. Earlier in November, in the most comprehensive rescue package for the sector, since it was hit by a debt crisis last year, regulators unveiled 16 supportive measures mainly aimed at boosting liquidity for developers.
Key measures include allowing banks to extend maturing loans to developers, supporting property sales by reducing the size of down payments and cutting mortgage rates, boosting other funding channels such as bond issues, and ensuring the delivery of pre-sold homes to buyers.
Some analysts say that the support measures are the strongest signal yet that the two-year clampdown on the property sector is over.
