Recently, I was evaluating real estate in India from an investment point of view. A 3 br flat in Greater Noida is going for 30-40 lac (USD 100,000), and a 3br flat in Noida is going for 60+ lac.
On the demand side, I don't know if there are enough people in the market for 30-40 lac flats that are being built by the thousands.
On the supply side, however, the picture seems better. Huge areas are opening up in Gurgaon/Noida/Dwaraka, connectivity is improving with the Metro and flyovers. Delhi has no natural barriers, and plenty of land around. If connectivity increases, and the government does not create artificial scarcity by restricting the private sector, then there should be plenty of supply.
(The story with Bombay is different because land is naturally scarce.)
I have decided against real estate investment in India for the present. Now looking into mutual funds in India. Basically, it may be a good idea to move some of my savings to India to hedge against dollar values. I will be happy with 10% gain in rupee terms (fix deposits are giving 6-8% in India). I am willing to tolerate a little bit more risk than fix deposits for a little bit higher return. The unfortunate problem is that fix deposits give 6% at zero (negligible) risk. If you want 10% at tolerable risk, you are taking an infinite increase in risk for a 33% increase in profit.
That's where the shackles of middle class mentality hold one back ....
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After reading this you may want to rethink your plan of investing in mutual funds.
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