Three Indian cities -- Bangalore, Mumbai and New Delhi -- figure in Asia's investors' choices for real estate investment in 2005.
According to Jones Lang LaSalle's annual Investor Sentiment Survey -- Asia, investment interest in the region will continue to be robust this year as well with more confidence in the retail and office property markets across the region.
As in 2004, investor interest in Asia will continue into 2005 although the average sentiment index has declined from 1.33 last year to 1.62 this year. This is a result of the cautious growth expectations amidst macro factors like the persistent weakening of the US dollar and fears of further US interest rate hikes.
"The medium-term outlook is however more optimistic, with over 60 per cent of the survey respondents expecting their total returns to improve, resulting in a medium-term sentiment index value of 1.54. With most of the property markets in Asia on an upturn, we expect the real estate investment market in the region to continue to be robust.
"With more market transactions, sellers are now more likely to find buyers for their assets," said Leslie Chua, head of real estate intelligence services - Asia at Jones Lang LaSalle.
"The Investor Sentiment Index measures investors' expectations of total returns and is an average of the responses with 1 being positive, 2 neutral and 3 negative. The majority of the cities surveyed received a positive or neutral assessment in the short term (12 months ahead). Mumbai and Bangalore topped the list of preferred real estate investment locations in Asia in 2005 with a sentiment index of 1.13, followed closely by New Delhi (1.17)," he added.
This can be attributed to India's strong economic performance and its established position as an offshoring destination for many multinational corporations, which has translated into a more robust real estate market environment.
"In terms of investments in China, a majority of the respondents (83 per cent) said that the current interest rate environment in China had no impact on their real estate investment strategies. However, despite its strong economic growth, respondents indicated that further growth of real estate returns in the two cities of Beijing and Shanghai may be limited. The lack of regulation remains a concern for investors. There were also persistent fears that the Chinese government may introduce regulatory measures to curb real estate growth in these cities," explained Chua.
Jones Lang LaSalle's Investor Sentiment Survey - Asia is conducted annually. Top executives from the most influential real estate investors -- developers, real estate funds, Real Estate Investment Trusts and private investors -- across the region participated in the third and recent issue of the pan-Asia survey.
The survey solicits investors' views on the outlook for various property sectors in 14 major cities across Asia and seeks to provide insights into expectations on investment returns and hence serves as a leading indicator of real estate investment sentiment and strategy.