BENGALURU: Bengaluru has emerged as the top real estate investment destinations in India, beating New Delhi and Mumbai, helped by strong demand for office spaces, according to a report.
The IT capital ranks 20th in property consultancy firm JLL's Asia Pacific City Investment Intensity Index, compared to 34th and 42nd for New Delhi and Mumbai respectively. This is Bengaluru's maiden entry into the list prepared by JLL, after figuring in a report of top 20 technology-rich cities globally earlier this year.
The report compares the volume of direct real estate investment over a three-year period relative to the current economic size of a city. Within Asia Pacific, Sydney ranks first followed by Auckland for the latest Q2 2015 Index s in terms of real estate investment relative to city size. On average, commercial real estate assets worth 10% of city GDP change hands every three years.
"Bangalore is a smaller city than the political and financial capitals of India and yet manages to attract a lot of investment in comparison of its size," Anuj Puri, chairman and country head, JLL India, said.
Private equity firms have invested about 13%, or $870 million, in Bengaluru's property market, between 2013 and the first half of 2015, out of the total investment of $6.7 billion.
Demand for quality office spaces in IT parks has been extremely high in Bengaluru, which has attracted global players in the city. The presence of multinationals, who also plans to ramp up their operations in the city, helps in ensuring steady rental yields for the real estate players. Embassy, along with private equity firm Blackstone, bought a majority stake in the 106 acre business park Vrindavan Tech Village in Bengaluru for Rs 1,951 crore last year, making it one of the largest commercial real estate transactions in India.
The report added that foreign investment interest in Bengaluru and other Indian cities may be underrepresented as the figures reflect equity investments at asset level. Due to low market transparency, foreign investment into the real estate sector in India is often through debt or or joint venture with local partners.
While global cities such as New York, London and Tokyo almost 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 2Q15.