According to the report, Mumbai’s steep slip in the list of attractive real estate investment destinations is due to growing economic and inflationary pressures.
The report predicts that the vacancy rates in the city are likely to remain stable through the close of 2011 and into 2012. Absorption rates will rise in Mumbai during the next financial year, but nothing can be predicted in terms of rental values as economic and inflationary issues continue to linger.
Speaking about the Mumbai market extensively, Ramesh Nair, managing director (West) at JLL India, an international property consulting firm, opines, “With the market set to bottom by out by the second quarter of 2012, we will see the beginning of a recovery in the city’s residential real estate fortunes by the second half of the year. In the first half of 2012, the city’s residential market will be more or less sustained by the sale of affordably priced mid-income apartments.” Although prospects are bleak for the city’s commercial real estate, the retail real estate sector looks buoyant in 2012, he added.
From investment perspective, Mr Nair said, “In 2012, Mumbai will underscore its status as a relatively safe haven for Indian core real estate. HNI investors will re-enter the market in a big way and the increased HNI investment volumes are likely to put pressure on core cap rate. Debt capital availability is likely to increase for core investments in the financial capital; however financing challenges will continue for high-risk, opportunistic real estate investments. With stiffening of lending policies and standards, debt will become more expensive and many city developers will reconsider the private equity (PE) route for their funding needs.”
The report also shares similar viewpoints on developers’ turning back to PE funds, as sales volumes become stagnant and rising labour and commodity prices squeeze finances.
Delhi too slips position
Apart from Mumbai, Delhi has also witnessed a sharp slide in the list of real estate investment destinations. From being the third preferred property investment market last year, the national capital’s position has slipped to 15th in 2012. Only Bengaluru has maintained its 10th position in the list, the report reveals.
On a positive note, the report maintains that India's consumption driven economy makes it a safe destination for real estate investment.
Jeeta Bandopadhyay |
Mumbai has slipped to 12th position in 2012 in terms of real estate investment opportunities from being the 5th most favoured property destination in 2011, according to a recent report titled ‘Emerging Trends in Real Estate Asia Pacific 2012’. The report is jointly published by the Urban Land Institute (ULI) and reputed research firm PwC. 
