The renewed confidence among India’s business community was the first thing that struck me about the country after a week spent in Mumbai.
I was in this remarkable city for Knight Frank’s Asia Pacific conference; a gathering of 200 or so employees from around the world to discuss the future of the business in the region.
There was much discussion of new prime minister Narendra Modi and the agenda for change he has set; one that appears to be positive for the people of India, for infrastructure and for real estate.
The encouragement of foreign direct investment and a route map for the launch of Real Estate Investment Trusts are just two among a range of developments being implemented. These changes, coupled with the attraction of India as a base for employment and a more confident local economy will, I suspect, see the country figure much more prominently on the list of global investment options in the next decade. Indeed, in the past couple of weeks, Norway’s sovereign wealth fund, the largest in the world, indicated plans to increase significantly its investment in India.
From the broad range of discussions held during the conference it is clear that the dynamics of the global market have never been so polarised.
Public funds, largely pension collectives and sovereign wealth funds, are, I understand, approaching $21trn of assets under management. In Canada alone, its pension funds increased by $150bn to more than £1trn in just the past 12 months.
In contrast, world debt is at a mind-bending $100trn; we have occupation of the streets in Hong Kong; a virtual collapse in oil prices; the growing threat of ISIS; slowing economies across much of Asia; uncertainty in mainland Europe and, as America ceases quantitative easing Japan starts – have there ever been such mixed messages in the world market?
An uncertain world then, but one in which private and sovereign wealth is growing in influence, seeking diversity and bringing the range of real estate investment options into much sharper focus.
Investors require transparency, clarity and, increasingly, greater diversity. It is therefore encouraging that occupier markets are evolving in recognition of this evolution in investment strategy.
Residential markets entrenched in owner occupation are now developing a rental alternative. London has been the laggard, but is now adapting quickly. City living is changing and many of the super cities of the world are once again becoming living, breathing, working places as Knight Frank referenced in our recent Global Cities report.
For this change to become entrenched, infrastructure investment is a priority. Hospitality and leisure sectors seem to produce new brands daily and “appetite” for growth on a massive scale. Technology industries are booming. Radical change in retail is producing global opportunities for real estate to evolve, with key shopping centres and the distribution sector best placed to benefit.
The key cities in the world mean business and each will be setting out its stall to attract investment and occupiers. India is no exception.
Alistair Elliott is a senior partner at Knight Frank
