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Business News/ Special Report / Bengaluru emerges as preferred choice among real estate investors in APAC region: Report
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Bengaluru emerges as preferred choice among real estate investors in APAC region: Report

The Knight Frank's 2023: Pivoting Towards Opportunities report cited consistent growth of startups and unicorns coupled with rising income levels for Bengaluru to be among preferred choice of investors in residential properties in 2023.

 File: AsiaPacific will remain the world’s fastest-growing region, says Knight Frank. Photo: MintPremium
File: AsiaPacific will remain the world’s fastest-growing region, says Knight Frank. Photo: Mint

Amid the higher mortgage rates, geo-political issues, post-Covid pandemic and surging inflation, India's Bengaluru emerged as a preferred choice –  after Singapore and Tokyo – among investors in the real estate sector for residential properties, showed a report published by Knight Frank on 1 December.

Since the real estate sector was marred by disruptive supply chain, weather events, labour crunch, high rental rates, and others, it had seen a downfall in the past few years. However, post COVID-19 pandemic, with the market is coming back to track, people in the APAC region are looking for places to settle down, selecting Bengaluru for its affordability, says the report. 

The report – 2023: Pivoting Towards Opportunities – covers the entire Asia Pacific region and looks into the length, breadth and depth of the real estate sector – particularly in the residential, office, logistics and capital markets.

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The Knight Frank opines 'growth momentum will continue to normalise, although some economies will still play catch up', adding recovering demand in domestic-oriented economies, particularly emerging Southeast Asia and India, should broadly support growth. It said that AsiaPacific will remain the world’s fastest-growing region.

“While the Asia-Pacific economy will face significant headwinds in 2023, it will remain a bright spot amid the shadows cast by the slowing global economy. Economies in the region will once again dominate growth worldwide, which will have implications for its real estate markets. That underlying growth will continue to underpin its attraction to occupiers, while its economic diversity offers ample opportunities for investors to target a range of asset classes to position their portfolios for the post-pandemic landscape," said KF's Asia-Pacific MD Kevin Coppel.

The report cited consistent growth of startups and unicorns coupled with rising income levels for Bengaluru to be among preferred choice of investors in residential properties in 2023.

However, it included challenges like rising mortgage rates and high inflation, which is dampening demand. Also, standoff between buyers and sellers, resulting in lower transaction volumes were cited as challenges.

The report noted outbound opportunities from Asian buyers into global markets and flight to safe haven markets, with transparent ownership and price growth as opportunities for the APAC market.

“We believe the region’s property market is better anchored to its economic fundamentals, which will also continually revive from reopening dynamics. The region’s economic growth story will remain urban-centric, and its residential investment landscape will continue to be defined by its prime urban cores. Underpinned by its high rates of urbanisation, investors can look forward to a more sustainable growth trajectory and wealth preservation profile," KF's Asia-Pacific Head of Residential Victoria Garrett said.

According to the Knight Frank Asia-Pacific Residential Review, 17 out of 24 cities tracked by Knight Frank registered positive annual price growth in the third quarter of 2022. This is down from 19 cities in Q2 2022. Average price growth for the region also slowed from 5.7% to 2.8% year-on-year (YoY), which confirms the housing market in the region has started to cool after the pandemic boom.

Among other details, except for the Chinese Mainland, which is still affected by the ongoing zero-COVID strategy, life is finally returning to relative normalcy in large parts of the region.

 

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Saurav Mukherjee
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Published: 01 Dec 2022, 06:17 PM IST
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