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 3 Indian metros in world’s Top 20 for real estate

3 Indian metros in world’s Top 20 for real estate
Published on 18 Sep,2015

Source: Emerging Trends in Real Estate Asia Pacific 2015, PWC

Sentiment toward India has picked up significantly in 2015, mainly as a result of the election of a new government. This created expectations among local businesses of an improved domestic economy and hope among foreign investors that they will be able to operate on a more-level playing field than in previous years.
However long the market takes to turn, the change in sentiment toward India from both domestic and international investors is evident. One reason for this is the election of a new government. Another is that growing economic confidence is creating an upturn in demand.

Currently, real estate funds focused on India are reportedly seeking to raise some US$6 billion in new capital, on top of US$1.6 billion raised in the first seven months of the year. Most of this is aimed at residential projects. In addition, there has been a significant increase in interest from large sovereign and foreign institutional players over the course of 2014. According to one interviewee, that is because India favours those willing to take a longer-term view.
Mumbai (11th in investment, 11th in development)

Mumbai’s position is much improved from its last-place position in 2014. On the ground, the situation in Mumbai is largely unchanged. Office prices remain stable. Rents have been stagnant for several years, but are now showing signs of inching up as local businesses become interested in rolling out expansion plans. Given the lack of interest among developers in recent years in building new projects, expectations exist that vacancies (currently standing at around 20 percent in Mumbai) will fall and prices and rents will rise, especially for high-quality, well-located premises.

New Delhi (14th in investment, 15th in development)

Residential development has historically been an important focus for real estate investors in the three zones that make up the National Capital Region (NCR) which includes the Delhi, Gurgaon and Noida regions. Demand stagnated in 2013, however, and is only beginning to recover. According to one interviewee, “In mid-market residential we can see a pickup visually, so 12 to 18 months down the line there should be a strong recovery in that segment. But upmarket residential NCR will continue to suffer for at least the next 12 to 24 months.”

Bangalore (17th in investment, 16th in development)

Business park facilities for multinational outsourcing purposes have long been the dominant theme in Bangalore, with both rents and capital values increasing steadily over the last few years. New projects continue to appear, with completions of almost 1 million square meters expected by the end of 2014, according to Jones Lang LaSalle. Some areas remain more popular than others. In particular, the corridor along the outer ring road is attracting a lot of attention, including a substantial investment from a Middle Eastern sovereign wealth fund. But the IT story is not the only one in town. Mid-market residential development has seen an ongoing success, even as residential markets elsewhere in India have faltered. In addition, Bangalore’s logistics facilities also have been thriving due to large volumes of online purchases made by tech-savvy workers staffing the city’s many software and technology related businesses.

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