Mumbai; India's number one future investment destination say investors and developers

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Mumbai; India's number one future investment destination say investors and developers

09 Dec 2009

With encouraging signs for economic recovery, the views of major market players are key to the current real estate investment scenario in India. Is the bounce back here to stay or is the market still pessimistic about the upcoming trends in the various real estate sectors?. Despite the slowdown, which are the cities investors still prefer the most from an investment perspective?. Is there a gap between what developers and investors perceive of the current market?

Colliers Investment Perception Survey (CIPS) aims to identify these prevailing market sentiments and likely future investment behavior; across cities and asset classes. A total of 227 participants including Private Equity Fund Managers, Real Estate Investment Trust Managers, High Net worth Individuals, Developers, Consultants, Investment Bankers and Asset Restructuring Companies from across the globe participated in the survey. The collated data from the survey has been analyzed and presented in order to provide an indicative glimpse of the current investment sentiment scenario in the Indian real estate market.

Each aspect effecting investment behavior from preference towards cities and asset classes, to average ticket size for investment; from return expectations to capitalization rates; from investment challenges to exit strategies; have all been analyzed in the report.

A few of the investors were found to be cautious about investing in the Indian real estate market due to frequent changes in regulations. From the number of factors considered by them when choosing a development partner, land bank was found to be the least important of all the factors.

Developers were relatively more optimistic than investors on retail development; while the reverse trend was seen in a few other sectors. The most preferred segment clearly stood out from all the others. In terms of format of development, the survey brought out the difference in outlook of the current residential market from both the developers and investors point of view.

The “Nano” effect of the automobile industry can be seen in the housing sector as well, making affordable housing the flavor of the year. The survey has a special focus on this segment with an aim to analyze the various factors influencing market players evaluating this segment.

When analyzing property cycles of each asset class within each city, despite a huge amount of upcoming supply , Mumbai was voted as the most preferred city for future investments by 75% of the respondents. Interesting opinions about the other cities showed a difference between what market participants plan and what the market perceives.