Bengaluru Listed in World’s Top 20 Commercial Real Estate Investment Cities

Bengaluru in the South India has made debut in the list of top 20 commercial real estate investment cities in the world after emerging as one of the top 20 technology-rich cities globally, according to a Jone Lang LaSalle report.

Bengaluru features in the property consultant JLL’s latest Asia-Pacific city investment intensity index at the 20th position. The index compares volume of direct real estate investment over a three-year period relative to the current economic size of a city.

Bengaluru hat sich in den letzten drei Jahrzehnten rasant entwickelt und gilt nun als Vorzeigestadt für Indiens Hightech-Industrie. Doch noch immer ist Bengaluru eine der ärmsten Städte im Index. Die 7,1 Millionen Einwohner erwirtschaften lediglich ein Pro-Kopf-BIP von 2.066 US-Dollar. Die Stadt verfügt daher nur über begrenzte Möglichkeiten, Umweltanforderungen mit dem dringend erforderlichen Wirtschaftswachstum in Einklang zu bringen. Bengaluru erzielt im Index ein insgesamt unterdurchschnittliches Ergebnis. Doch der Übergang von einer produzierenden Industrie zur IT-Industrie hatte positive Auswirkungen auf die Umwelt und gab auch den Anstoß zur Entwicklung neuer, energieeffizienter Gebäude. Bengaluru, with a population of 7.1 million, has developed rapidly in the past three decades to become a symbol of India’s high-tech competence. It is still one of the poorest cities in the Index with a per capita GDP of US$ 2,066, and therefore has limited ability to balance environmental needs with the pressure for economic expansion. It ranks below average overall in the Index. But its shift from manufacturing to IT-based industry has had positive effects on the environment and has also spurred the development of new, energy-efficient buildings.

While the  cities like New York, London and Tokyo nearly always rank at the top in commercial real estate investment volumes by virtue of their sizes, the top five cities across Asia-Pacific region are Tokyo, Singapore, Seoul, Sydney and Hong Kong, ranked by three-year rolling direct real estate investment volumes ended June 30, 2015.

Within Asia Pacific, the index sees Sydney and Auckland at the top two spots in terms of real estate investment relative to city size. Bengaluru is at 20th position while Tokyo, Hong Kong and Singapore still rank among the top ten but Seoul ranks lower at 13th.

“Due to lower market transparency, foreign investment into India is often through debt or at the entity level. Hong Kong, Singapore, Tokyo and Taipei still rank among the top ten with their transparency scores close behind while the less transparent markets of China, India and emerging Southeast Asia are under-represented among the league,” JLL Chairman and Country Head Anuj Puri said.

It noted that this provides opportunity for investors with local knowledge to find deals; the size of the cities’ GDP shows there is capacity for real estate investment to increase.

“Foreign investment interest in Bengaluru and other Indian cities may be underrepresented in the index as these figures reflect equity investments at the asset level.”

Direct real estate investment is generally difficult for foreigners in India, and investors looking to take part in market growth may need to go through routes such as debt deals and joint ventures with local partners.

New Delhi and Mumbai figure at 34 and 42 positions, respectively. The reason for these two bigger cities figuring so low is the index wants to highlight only those dynamic, mid-sized cities that are punching above their weight in terms of their attraction for investors.

On an average, commercial real estate assets worth 10 per cent of a city’s gross domestic product (GDP) change hands every three years.

Author: SubEditor

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