Indian property market shows signs of overheating

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by Gill Montia

Fears that the Indian property market could be overheating have been heightened by the actions of ICICI, one of the country’s leading banks.

Its managing director, KV Kamath, has confirmed that the bank will be applying stricter lending criteria to property loans.

Some analysts are predicting that the market will see a sharp decline during 2008, with forecasts of a 20% fall in prices.

Interest rates are around 10% for variable and 11% for fixed-rate mortgages, and property prices in Mumbai, the country’s financial centre, are among the highest in the world at $9,000 to $10,200 per square metre.

In New Delhi apartment prices range between $2,000 and $3,000 per square metre while in Bangalore, India’s Silicon Valley, the cost decreases but only to $950 to $2,000.

However, estate agents Hamptons International is undeterred and has opened a new office at Gurgaon, near Delhi.

The office will provide the usual residential and commercial services plus a high net worth and institutional investor wealth management division.

The firm is currently marketing a wide range of properties throughout India, including a new phase of five-bedroom homes at the popular Mohali Villas development in Chandigargh, which is close to the foothills of the Himalayas.

Two and three bedroom apartments, plus four-bedroom two-storey penthouses are also still available at Mohali Villas.