Indian Metros Slip down in APAC Realty List

Bangalore: High inflation and sluggish economic growth made Delhi and Mumbai to skid onto the 12th and 15th position respectively in 2012 from 5^th and 3^rd position in the previous year, as stated in Emerging Trends in Real Estate Asia Pacific 2012, a joint report published by Urban Land Institute (ULI) and PWC.

New Delhi has witnessed a drastic fall in terms of development front and the position of Delhi has dropped to 13^th position from 2^nd position in Emerging Trends in Real Estate survey. “Inflation has continued to spike costs, and it may not be economically feasible to build there. Rankings for investment opportunities slid hard as well, down from fifth to 12th overall. Ongoing funding problems do provide investment opportunities for private equity investors”, said the report.

According to the report, through the close of 2011 and into 2012, the vacancy rate in Mumbai is likely to remain stable and absorption will again be positive next year, but rental values remain questionable as economic and inflationary issues continue to linger. The supply in residential sector is limited and rental value is likely to increase in the coming year.

However, Bangalore has maintained the10^th position like earlier in Asia-Pacific real estate survey and as per the report, “Bangalore continues to be a stable play. It never crashed when the subprime crisis hit, and it didn’t rocket up even when the markets were doing well in 2006–07. It’s a very organic, growth-driven market.”

Due to sluggish sales, hike in labor cost and hike in commodity prices has lead to downfall in economy and as a result developers are approaching private equity firms as the last option. Knight Frank consultants stated that, “Indian developers will receive about $1 billion from private equity funds in the year to March 2012. In a market as large as India, that is still far from impressive, but incoming capital is expected to rise in the following year. If it does, it will represent a significant turnaround for a market that foreign private equity investors have largely shunned since the onset of the global financial crisis”, said the report.