A new analysis of 12 global cities has named London and New York as the top international cities based on various indicators, and has ranked Mumbai with Moscow and Rio de Janeiro where residential real estate investment yields lowest returns.
'12 Cities', a report by London-based realty major Savills, classes cities on the basis of their prominence and fame, as well as economy and size — factors that will determine the cross-border investability of their real estate, their future and their present 'world class' city status.
Mumbai ranks low for commercial real estate investment yields. It is ranked with Shanghai, Dubai and Rio, where Savills says gilts are underperforming. Mumbai's residential real estate value is "most vulnerable to correction", it says.
Mumbai is also considered one of three 'hottest markets' — the others being Hong Kong and Shanghai — where valuations are close to levelling off.
A Savills spokesperson told HT: "Mumbai is 'hot' in the sense that it is the most overheated of the 12 cities we monitor. Residential yields are low in relation to government bond yields, and affordability is poor when considered against city-wide wealth (for which we have used GDP per capita as a proxy)".
Yolande Barnes, director of Savills World Research, said: "The redrawing of the global economic map is having a significant impact on real estate. 'New world' economies, notably China and India, have recently seen weakened growth, while older industrialised economies, including the USA, UK and Japan, are now recovering more strongly than many anticipated".
"As a result, the runaway real estate growth of 'new world' cities has abated and in some cases, such as Mumbai and prime Hong Kong, it has reversed."