Bengaluru has overtaken Mumbai as the most preferred real estate investment destination in India, according to an report jointly published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC). The report titled ‘Emerging trends in real estate Asia Pacific 2016’ said Bengaluru is emerging as the real estate capital of India.
The report is based on the opinions of more than 400 internationally renowned real estate professionals including investors, developers, property company representatives, lenders, brokers and consultants.
“If someone has Rs 10,000 with him, he would rather put his money in Bengaluru than in Mumbai because you get more affordable apartments at that price in Bengaluru. Also, the investor is confident of the price appreciation in Bengaluru due to the absence of speculation,” Bhairav Dalal, partner, Tax and Regulatory Services, said.
He also said the e-commerce and startup boom in Bengaluru is driving office space absorption, which in turn is resulting in residential demand as well.
Interestingly, the survey also quoted a local consultant as saying: “What we’ve seen for the first time during the last 12 months is that firms that were originally based out of Delhi, Pune or Mumbai, grew to a $ 600-700 million valuation and were in the race for a $ 1 billion valuation have been pushed by their venture capital backers to relocate to Bengaluru, because that’s where you find the critical mass to be able to ramp up your business”.
It also said that in Bengaluru, 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 survey also pointed out that Mumbai is on a recovery path as far as commercial real estate is concerned. On the residential side, it said there is currently a reasonable amount of oversupply in the suburbs. However, with the recent slowdown in approvals for new projects, the oversupply situation could get addressed to an extent.
“While Mumbai and New Delhi have marginally dropped in rankings from an investment prospect perspective, New Delhi ranks 2nd and Mumbai ranks 5th in the buy recommendation rankings for industrial and distribution properties among the 22 cities covered. Also, Mumbai ranks 8th and 9th respectively for the office and residential buy recommendations. These numbers, in a way, indicate that the investment prospect rankings of these cities could move up and enter the top-10 bracket in the years to come,” Abhishek Goenka, partner, PwC India, said.
PwC said the survey was conducted in September and October, prior to the easing of norms for regulation of foreign direct investment (FDI) in the construction development sector and in alternative investment funds. The study does not factor in the change in sentiments.
The survey said Mumbai is on a recovery path on the commercial real estate front
