Delhi and Mumbai have slipped in an Asia-Pacific (APAC) real estate investment opportunities list for 2012 owing to economic and inflationary issues, says a joint report by the Urban Land Institute (ULI) and PwC.
The report, titled, 'Emerging Trends in Real Estate Asia-Pacific 2012', found Delhi and Mumbai dropped from fifth and third place in last year's list of real estate investment prospects to 12th and 15th position, respectively, in 2012.
However, Bangalore maintained its position as the 10th most favoured investment destination in the Asia-Pacific real estate space.
"Bangalore continues to be a stable play. It never crashed when the sub-prime 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," the report noted.
In terms of development prospects, Bangalore gained two positions to rank seventh in 2012, while Mumbai dropped dramatically from first to 10th place and Delhi fell from second to 13th place.
The report said vacancy rates are likely to remain stable in Mumbai in 2012. Furthermore, while absorption will be positive again, rental values remain questionable, as economic and inflationary issues linger.
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About Delhi, the report said, "Inflation has continued to spike costs and it may not be economically feasible to build there... Ongoing funding problems do provide investment opportunities for private equity investors."
The report said, "India's economy continues to produce the second-fastest growing gross domestic product in the Asia-Pacific region, just behind China, but developers face great difficulty raising capital through the nation's banking system."
"Within the country, investment prospects are brightest for Bangalore; however, respondents noted concern about the economy in general. Rankings plummeted for New Delhi and Mumbai, both affected by inflation concerns," it added.
Meanwhile on the Asia-Pacific level, Singapore and Shanghai have retained their first and second ranking, respectively, as property investment hotbeds.
Sydney replaced Mumbai as the third-most preferred destination, followed by the fast-growing Chinese city of Chongqing and Beijing.
In the development category, Shanghai bagged third rank, followed by Chongqing, Beijing and Jakarta.