The real estate market in China is currently experiencing one of the most troubling economic developments worldwide. Experts predict that India, notably its steelmakers, may benefit from the China real estate crisis. Despite the fact that it poses a threat to global trade.
The fall of the Chinese real estate industry will also lower commodity prices, that will benefit all of India.
This could be an excellent chance for India to establish its businesses and displace China. India is the second-largest producer of steel behind China, according to records, so the opportunity seems obvious to Indians.
WHAT CAUSED THE HOUSING CRISIS IN CHINA?
The Chinese housing market has debt. Construction has been put on hold as a result of massive debts accumulated by large real estate developers like the Evergrande, which has angered many homebuyers.
The second-largest real estate company in the nation, China Evergrande Group, which has $300 billion in debts. It is among the 21 significant developers that have fallen behind on their loans in the past year. About 20% of Chinese developers, according to S&P Global Ratings, are bankrupt.
Since last year, investors have worried about the financial difficulties of Chinese real estate developers. How it may impact the whole economy. Even as China’s economic growth slows, the refusal of many homeowners to pay their mortgages over the past two months has brought developers’ problems back to the forefront.
HOW DOES THIS HELP INDIA?
According to a research report by the State Bank of India, as China faces an economic downturn, India appears to be a clear beneficiary. This is in terms of an attractive investment destination and is also emerging as the best alternative with a positive growth and inflation forecast in the current fiscal.
While China struggles, Housing sales in India during the first half of 2022, meaning from January and June, hit the greatest level since the first half of 2013. Low lending rates, cheap unit prices, and revived demand for homes driven by the Coronavirus epidemic were the key drivers of the surge in housing sales in India. The sale of 158,705 units in the first half of 2022 increased by 60% year over year. This outpaced H2 2021 by 19%.
A decline in world oil prices will also be one of the first worldwide effects of a Chinese recession. India is a major importer, as we all know. India will be able to reduce its import expenditure if oil prices fall globally. Additionally, it will reduce the strain on the currency and increase India’s foreign exchange reserves.
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