Bengaluru, Mumbai top two realty spots in Apac
Bengaluru and Mumbai have become the top two realty investment destinations for 2017 in the Asia-Pacific (Apac), says a report.
While capital of the Philippines, Manila, got the third spot, Ho Chi Minh City in Vietnam, and Shenzhen in China, stood fourth and fifth, respectively.
The PwC-Urban Land Institute report said the Indian realty market as a whole has become a compelling story, due to availability of highquality assets that offer good yields, as well as strong tenant demand and falling financing rates. PwC is PricewaterhouseCoopers.
In development category, Bengaluru retained the first spot, followed by Ho Chi Minh City, Mumbai, Manila and Shenzhen, it said.
Though Bengaluru topped in investment and development across Apac, headwinds face the technology and business process outsourcing (BPO) sectors — the mainstay of the city's realty market — after Donald Trump's win in the US presidential election.
"While Bengaluru has emerged top real estate market in the country, peak growth in the city is now behind it. Strong demand from information technology and e-commerce sectors is likely to continue, but questions over the long-term prospects of the BPO sector have emerged," PwC India partner and leader for real estate Abhishek Goenka said.
Regarding Mumbai, the report said the geography has prevented easy expansion of city's metropolitan area, which has made it both the most expensive city in the country and the slowest-growing. But a major road and railways programme will allow easier access to the centre, with most construction set for completion before 2019, it noted. Banks concentrating on a few states has led to rising loan defaults (giving up of loan repayment) and non-payments in micro as well as small and medium enterprises (SMEs), a report by TransUnion Cibil said on Thursday.
"Focusing on a few states deprive the lenders of an opportunity to exhibit calibrated loan growth. Currently, some banks tend to have analytical and strategic focus on five or at most 10 states and may not be fully sensitive to industry credit profile divergences," TransUnion Cibil India managing director and chief executive Satish Pillai said.
He cited Rajasthan, which has the lowest non-performing assets (NPAs or bad loans) for commercial loans at two per cent, but also the lowest concentration of loans.
According to the report, the NPA rate in micro enterprises has been range-bound between 6 and 6.5 per cent, but the SME segment shows a worrying trend in terms of loan quality, as NPAs have grown to 11 per cent from eight per cent of loans made earlier. "The credit industry has been focusing on the micro and SME segments to overcome the challenges of commercial loan growth blues. But, the NPA trends in these two segments will also have to be monitored," it said. It said real estate and construction businesses have observed significant high NPAs of over six per cent each, but also witnessed loan growth of 11 and 14 per cent, respectively.