I have been doing this sort of exercise since I first visited south Asia seven years ago, and I get about the same outcome every time. It is not credit that is driving this market--many people buy property with cash. People tell stories about "black money" financing property--this is untraceable, and therefore untaxed, money. But our calculations imply an implicit tax rate of 60 percent--taxes in India are not that high (in fact, other than an eight percent transfer tax, they are fairly similar to the US).
So the story must be about expectations, and indeed, that is the story I hear. But current yields are well under 3 percent, and if values rise faster than rents, those yields will get even lower. Something has got to give. I just have no idea when.