Delhi and Mumbai are ranked 36th and 40th most influential cities in the world and hold promise for potential investors. New York takes the top slot from London, push- ing it to second position, according to Wealth Report 2010 brought out by international realty consultants Knight Frank and Citi Private bank.
“There are growing prime markets in every city of India. But South Mumbai and South New Delhi are the markets that are the most premium in terms of prices followed by Bangalore, Chennai and Hyderabad. We anticipate that prices in Mumbai and Delhi will return to the peak levels of 2008 this year,“ said Pranab Datta, vice chairman and MD, Knight Frank India.
The Asia Pacific region is one of the most popular mar- kets for investment with economies such as India and China having gained momentum for prime property markets, it said.
Rock bottom interest rates and the “creation“ of money via government stimulus packages have led to an injection of liquidity into the world economy, which has found, inevitably, its way into asset markets, including property, gold and shares, the report said.
The Wealth Report 2010 consists of three components the surveys conducted on the Prime International Residential Index (PIRI), World’s most influential cities and a unique survey on the HNWI attitudes to property and wealth.
Residential index Knight Frank’s Prime International Residential Index (PIRI) indicates that the price growth in Mumbai has increased +11 per cent.
However, the proportion of mortgage debt to GDP is still around 6-8 per cent in India.
The cities survey The World most influential cities survey was conducted on the basis of four parame- ters — economic activity, political power, knowledge and influence and quality of life. New York took the top slot from last year’s leader London. Beijing, Singapore, Kula Lumpur and Mumbai registered big gains. The findings confirm that London saw the number one spot wrenched from its grasp by New York. The UK capital has suffered more than many financial centres during the recent financial downturn and there is growing concern among the footloose interna- tional elite over the city’s pre- viously relatively stable tax environment.
Despite this reversal of for- tune at the top of the table, the gap between the top four cities (New York, London, Paris and Tokyo) and the next city (Los Angeles) is still substantial, suggesting it will be some time before the emerging city contenders will pose a serious challenge to the top grouping.
Unsurprisingly, one of the key themes this year is the strengthening power of the emerging centres, with big gains experienced by the likes of Beijing, Singapore, Shanghai, Kuala Lumpur and Mumbai. Driven by their improvements in political power and influence, and also by economic drivers — in particular the astonishing rate of growth of financial sector activity in Shanghai and Beijing, for example — all these cities are beginning to gain The HNI attitude The results of the third sur- vey — the Attitudes Survey indicates that high networth individuals (HNIs), wherever they are around the world, still see property as one of the best assets to own, with most predicting values to grow in 2010. Property, along with gold, is one of the most popular investments in Asia Pacific, according to Quek Kwang Meng, head of real estate investments in the region for Citi Private Bank.
“People love hard assets.“
HNIs have a fondness for tangible assets, with property making up the largest share of their investment portfolios.
Of the HNIs who participated in The Wealth Report 2010 Attitudes Survey, property, on average, accounted for one-third of their assets. Only 8 per cent of those questioned had no property investments at all. Europeans were the biggest property enthusiasts, where this asset made up almost half of their invest- ments. South Americans were the most reticent, with only just over 10 per cent of their investments in the prop erty sector.
Asian investors held the biggest share of residential property at almost 70 per cent, while for North American HNIs, commercial property (55 per cent) had the edge over residential bricks and mortar (40 per cent). South American and Asian HNIs seemed particu- larly fond of “hard“ property assets with investments in property funds. REITs, however, barely registered in the survey responses.
HNIs are also optimistic about the fortunes of the property sector, with just over 70 per cent of respon- dents tipping it as a good – investment opportunity in 2010 The report points out that for many HNIs, residential property remains the most attractive investment, given the dynamics that underpin key cities such as London, New York and Hong Kong.
“There is a focus on the very prime areas which are always in short supply and facing steady demand from buyers and tenants in global centers of finance and culture,“ said Michael McPartland, manag- ing director and head of resi- dential real estate at Citi Private Bank.
Liam Bailey, head of resi- dential research at Knight Frank agrees: “Residential investment makes a lot of sense over the long term. In most locations, supply of property either keeps pace or falls short of demand. Most HNIs tend to cluster around the best locations in the world, which provides its own support.“
Many HNIs have also returned to commercial property markets.