The investment case for India’s third tier cities is still strong despite the financial turmoil being felt in the country, according to property services firm Jones Lang LaSalle.
India’s economy has suffered amid the global deleveraging with general repricing across real estate markets and predictions the country’s gross domestic product will fall from an average rate 8.9 percent to 6.2 percent for 2008/2009.
However Jones Lang LaSalle said in their “India30 Real Estate Opportunities in Tier III Cities” report, that the country’s tier three cities are well placed to weather the storm. Highlighting 30 cities, the firm said these locations would “set the benchmark by which other [tier three] cities will be measured.”
Assessing the investment potential of the cities by “size, market reach and connectivity”, Jones Lang LaSalle said the most attractive investments would be found in Ahmedabad.
Chandigarh, Kochi, Jaipur and Nagpur. Anuj Puri, chairman and country head of Jones Lang LaSalle Meghraj said these cities “offer the strongest real estate potential combined with the lowest market risk.”
According to the report: “The [30 cities highlighted by the report] still account for a relatively small proportion of real estate activity (21 percent of modern offices and 34 percent of shopping malls), but with 41 percent of the country’s wealth, the potential of these tertiary markets is clearly evident”
“Domestic players continue to expand rapidly into tier three cities, and whilst foreign players are currently adopting a cautious approach in today’s uncertain global economic climate, over the longer term we anticipate the India30 will offer new opportunities for both domestic and foreign real estate investors, developers and occupiers,” he added in a statement.