Foreign investors have given up a thumbs-up to the Indian foreign investment policy for the real estate sector which has helped the country regain favour as a preferred investment destinations in the Asia Pacific region, says the Emerging Trends in Real Estate Asia Pacific 2016 report, jointly published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC).
Bengaluru, Mumbai and New Delhi were ranked 12, 13 and 16 by survey respondents for investment prospects and 15, 13 and 11 positions, respectively, for development prospects in the list of the 22 markets covered in the report. While Mumbai and New Delhi have dropped in rankings from an investment prospects perspective (they were ranked 11 and 14, respectively in Emerging Trends in the Real Estate Asia Pacific 2015 report), Bengaluru has shown a remarkable improvement as it has moved up five positions over its last year’s ranking (17th). The report attributes the surge in Bangalore’s rankings to its technology industry and the availability of a large pool of skilled labour necessary to ramp up the venture capital backed startups.
The report highlights that Mumbai is on a recovery path on the commercial real estate side and, down-town is on stable ground. Delhi and nearby industrial zones have one the biggest pipelines of new supply in Asia and on the ground, occupancy problems are focused on B-grade or secondary assets rather than the higher-quality buildings, for which the demand remains high.
The story in Bengaluru is, however, different from that of in Mumbai and Delhi, where even the huge amount of upcoming supply of commercial office inventory is not perceived to be a cause of concern, as it is expected to be matched by an equally high absorption rate.
The outlook seems positive; this is evidenced by the fact that 80% of the foreign capital inflows have been all-equity buyouts by big institutional players. Even those investors who had burnt their fingers in the first round of investments in 2006-07, are not wary of Indian markets anymore, and are willing to bet their money once again on the Indian real estate story.
The Emerging Trends report provides an outlook on Asia Pacific real estate investment and development trends, real estate finance and capital markets, and trends by property sector and metropolitan area. It is based on the opinions of more than 400 internationally renowned real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants.