Chinese property developers should not be too eager to move into Indian market

By Xiao Xin Source:Global Times Published: 2017/5/18 22:13:40

India may not be a promised land for Chinese property developers seeking new frontiers beyond their homeland.

Data from the National Bureau of Statistics, China's top statistics bureau, on Thursday pointed to moderating growth in home prices across major Chinese cities in April, an indication that tougher measures to rein in the red hot housing market have taken effect and that China's property sector might have passed its peak growth period.

In this context, Chinese developers may need to either diversify into other businesses - something many of them are already working on, but with only limited success in a lot of cases - or expand into overseas markets.

The latter appears to be a more tempting option for a number of firms.

Other than building properties in developed markets that typically appeal to wealthy Chinese people, domestic developers including Dalian Wanda have shown an interest in housing projects in India.

It may seem obvious that India, a populous and rapidly developing country, would be the ideal choice for Chinese property developers in pursuit of the next big market opportunity. The Financial Times (FT) said in an article on Tuesday that "India offers the next frontier for Chinese property developers."

But just as the article also mentioned various obstacles facing Chinese property developers in the Indian market, it shouldn't be taken for granted that the emerging middle class in India is ready to support a housing boom.

Chinese developers should avoid a blind rush into the Indian market where the rules of play are vastly different. While bidding for land in China for property development normally entails substantial efforts, the complexity of acquiring land in India is even greater, given the country's land control regulations.

In fairness, the fast-growing Indian economy and a burgeoning middle class has made the country increasingly alluring as an investment destination for Chinese businesses.

The newest data from US-based market research firm International Data Corporation revealed that Chinese phone vendors took up more than half of India's smartphone market in terms of shipments in the first quarter of the year, a promising sign perhaps that Chinese brands are popular in India. But Chinese businesses, property developers in particular, should not see this as the start of a race to invest in the Indian market.

The author is a reporter with the Global Times.


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