Nine In­dian cities make it to JLL’s Global 300 list

HT Estates - - FRONT PAGE - Ramesh Nair feed­back@hin­dus­tan­times.com Ramesh Nair is CEO and coun­try head, JLL In­dia.

A to­tal of nine In­dian cities fig­ure on the lat­est edi­tion of Global 300 cities—the an­nual JLL rank­ing ex­er­cise, which rep­re­sents 300 ma­jor cities that are the fo­cus of com­mer­cial ac­tiv­ity and in­ter­est, 40% of the world’s econ­omy and three­quar­ters of global real es­tate in­vest­ment. In an ever-chang­ing world, more ur­ban cen­tres in In­dia are rapidly emerg­ing as play­ers on the global stage— mov­ing be­yond the power houses of Mumbai, Delhi and Bengaluru.

While the megac­i­ties of Delhi and Mumbai rank in the Global Top 30—thanks largely to their huge scale—other cities such as Bengaluru, Chennai and Kolkata sit within the Global Top 100, with Hy­der­abad sit­ting just out­side. Mumbai(17) is amongthe20 largest cities in the world by gross do­mes­tic prod­uct (GDP), while Delhi (22) sits just out­side of this —both cities haveaGDPof more than $400 bil­lion. This also makes them the fifth and sixth largest cities in Asia, re­spec­tively, only be­hind Tokyo, Shanghai, Seoul and Jakarta.

Both the megac­i­ties demon­strate their sheer scale by be­ing larger than the likes of Singapore, Hong Kong, Wash­ing­ton and San Fran­cisco. How­ever, in GDP per capita terms, Mumbai and Delhi lag their global coun­ter­parts, due to their large pop­u­la­tions. While both In­dian cities sig­nif­i­cantly lag Shanghai, Beijing and Seoul, even the Amer­i­can cities and Singapore have per capita in­comes that are three to four times larger.

In terms of cor­po­rate pres­ence, Mumbai comes ahead of San Fran­cisco, Shanghai, Syd­ney, Singapore, Wash­ing­ton, At­lanta, Toronto, etc.

Delhi, too, is ahead of cities like Guangzhou and Frank­furt. Cor­po­rate pres­ence is based purely on num­ber of head­quar­ters of the Forbes 2000 list. The scale of the In­dian mar­ket­means that 38 com­pa­nies—based in ei­ther Delhi ( 14) or Mumbai (24)—make the list, from In­dia’s largest IT firms to banks and en­ergy firms. This does not ac­count for re­gional or sec­ondary of­fices of global firms, which may help ac­count for Mumbai and Delhi’s high po­si­tions.

Al­though some at­ten­tion is start­ing to turn to the coun­try, In­dia’s cities are not large re­cip­i­ents of di­rect real es­tate in­vest­ment, given the dif­fi­cul­ties in ac­cess­ing stock and mar­ket trans­parency. Mumbai sees sim­i­lar in­vest­ment vol­umes to cities such as Guangzhou and Mex­ico City, but just 5% of those seen in Shanghai ($37 bil­lion) and 10% of those seen in Beijing ($18 bil­lion). Over the past three years, Mumbai has at­tracted $1.7 bil­lion of real es­tate in­vest­ment, while Delhi has seen $0.6 bil­lion.

This puts both cities out­side the Global Top 100 real es­tate in­vest­ment destinations, de­spite their scale. These mar­kets are dom­i­nated by do­mes­tic play­ers,

MUMBAI, DELHI ARE BE­HIND ONLY TOKYO, SHANGHAI, SEOUL, JAKARTA IN ASIA IN TERMS OF GDP

rather than in­ter­na­tional in­vestors. These lower rank­ings sug­gest that, while Mumbai and Delhi have the scale to match their global coun­ter­parts, they are un­der­per­form­ing in terms of di­rect real es­tate in­vest­ment. It is also in­dica­tive of a his­toric pref­er­ence by in­vestors to look to de­vel­op­ment and debt lend­ing to gain ex­po­sure to real es­tate in the In­dian mar­ket.

How­ever, a num­ber of key pol­icy changes taken by the govern­ment in re­cent times such as RERA, REITs, sim­pli­fi­ca­tion of tax­a­tion and eas­ing of FDI re­stric­tions are ex­pected to counter this. Along with com­ple­tion of new high-qual­ity stock by com­mer­cial de­vel­op­ers, which will in­crease the amount of in­vestable as­sets across In­dia, these de­vel­op­ments are en­cour­ag­ing in­creased in­ter­est from in­ter­na­tional in­vestors.

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