India’s real estate sector booms, but first-time buyers beware

NEW DELHI, Dec 15, 2006 (AFP) – India’s real estate market is in overdrive as developers snap up land to build malls and housing enclaves, but high prices and opaque rules make it hard for first-time buyers to land a dream home.

The sector, worth 12 billion dollars, is growing at 30 percent a year, according to the Federation of Indian Chambers of Commerce and Industry, and prices have risen sharply in the last five years, analysts say.

In the first quarter of 2006, rent and house prices soared more than 45 percent in New Delhi, according to real estate consultancy Colliers International.

Prices for office space have surged too by as much as 25 percent in the financial hub Mumbai and close to 50 percent in the capital on a rising economy and easy loans.

“A lot of multinational companies have come in, so the employment rate has improved and income levels gone up,” Anshuman Magazine, head of global real estate consultancy CB Richard Ellis South Asia, told AFP.

“Another point is the mortgage rates. Twelve years back you wouldn’t get a mortgage. If you got it, it was at 18 percent plus interest.”

With economic liberalization in the 1990s, home loan rates fell to as low as six percent before firming up to