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India ranks as the fifth-largest recipient of cross-border investments in the Asia Pacific region, drawing in $3 billion in funds. In the Indian real estate market, the office sector commands the highest portion of investment, accounting for 36% of the total.
A recent report reveals that India ranks fifth in cross-border real estate investments in the APAC region, capturing 9% of the total investment volume for the first half of 2024. According to Knight Frank’s ‘Asia Pacific Horizon: Look Beyond the Norms’ report, the total cross-border investments in APAC amounted to $11.5 billion during this period, with India attracting $3 billion from global private equity investors.
In Indian real estate investment, the office sector attracted 36% of the total global capital, highlighting the strong appeal of commercial real estate assets. The industrial sector came next with 30% of the investment, followed by the residential sector, which received 15%, and the retail sector, which attracted 10%.
Top 5 Destinations for Cross-Border Capital in the APAC Region:
Rank Country % Share
1 Australia 36%
2 Japan 23%
3 Singapore 11%
4 Greater China 10%
5 India 9%
Source: Knight Frank Research
Shishir Baijal, Chairman and Managing Director of Knight Frank India, noted, “The expected recovery of global economies in the latter half of the year is likely to draw more foreign private equity investors, eager to capitalize on the country’s robust domestic fundamentals. This influx is likely to enhance the performance of Indian real estate and sustain the growth of industry assets.
“Cross-border capital flows are significantly influencing the commercial real estate market in the Asia-Pacific region, fueling the search for new investment opportunities. Interest rate cuts are expected to lead to over a one-third increase in cross-border investments in the region during the second half of 2024 compared to the same period in 2023.
A separate report from property consultancy Knight Frank India highlights that Delhi-NCR is currently the fifth most expensive office space rental market in the Asia-Pacific region.The report also highlighted that Hong Kong SAR is the most expensive office market in the APAC region for the April-June quarter of 2024.
The report indicates that Delhi-NCR’s prime office market has consistently maintained rental values over the past six quarters. With a prime office rent of Rs 340 per sq ft per month, it ranks fifth in office market expenses within the APAC region.”
In comparison, Mumbai’s prime office rent was reported at ₹302 per sq ft per month, making it the eighth most expensive commercial market in the APAC region. The office leasing market in Mumbai saw substantial growth, with around 3 million sq ft leased, reflecting an impressive year-on-year increase of 183.1%, according to the report.
Bengaluru, known as India’s IT hub, is ranked 18th among the most affordable prime office markets in the Asia-Pacific (APAC) region. The report reveals that prime office rent in Bengaluru is ₹137 per sq ft per month, showing a slight year-on-year increase of about 1.3%.
The report also noted that Bengaluru continues to lead among the three major Indian cities, with 4.9 million square feet leased in the second quarter of 2024. The market has benefited from companies promoting a return to the office for employees.
Additionally, there has been a notable 50% increase in transaction activities across key office markets in India, including Delhi NCR, Mumbai, and Bengaluru. Despite this growth, prime office rental rates have remained steady from April to June 2024, according to the report.
Gold prices are climbing once more, as central bank purchases and market speculation about future economic policies have outweighed the effects of the duty reduction.
Despite the government’s decision on July 23 to cut Customs duties on gold, silver, and platinum, gold prices have continued to rise. The initial dip following the announcement was brief, with various factors driving prices back up.
On Friday, August 2, gold futures on the Multi Commodity Exchange (MCX) saw a notable increase, with prices rising by ₹641 to ₹70,595 per 10 grams.
This rise, seen in the August delivery contracts, represents a 0.92% increase in a business turnover of 19,971 lots.
Analysts attribute this rebound to new positions taken by speculators and strong demand in the spot market.
Globally, gold futures have also been rising, with prices up by 1.12% to ₹2,508.60 per ounce in New York on Friday.
Geopolitical tensions and economic indicators
Renisha Chainani, Head of Research at Augmont – Gold For All, explains that gold prices are climbing above $2,500 due to several key factors.
“The market is responding to anticipated interest rate cuts in September, rising geopolitical risks, and significant central bank purchases, particularly from emerging markets in Asia. Additionally, growing interest in gold through ETFs and the physical market has supported higher prices,” Chainani said. She added that psychological resistance levels are now approaching $2,525 per ounce (approximately ₹71,000 per 10 grams) and $2,550 per ounce (around ₹71,700 per 10 grams), indicating that prices may break these barriers soon.
Prathamesh Mallya, DVP – Research at Angel One Ltd, noted that while gold prices briefly cooled due to a stronger US dollar, expectations of a rate cut by the US Federal Reserve and ongoing geopolitical uncertainties have kept gold prices high.
“Although gold prices experienced a brief decline due to a stronger dollar, overall, strong demand for safe-haven assets and central bank actions continue to sustain high gold prices. The market is awaiting the upcoming US non-farm payrolls data for further guidance on Federal Reserve policies,” Mallya said.
Should you buy gold now?
Considering the current market conditions, the decision to buy gold should be carefully evaluated. Here are some factors to consider:
Rising prices: With gold prices surpassing $2,500 and nearing new resistance levels, the potential for further increases remains.
If investors believe in gold’s long-term value as a hedge against economic and geopolitical risks, purchasing now could be beneficial.
Diversification: Gold can be an important part of a diversified investment portfolio, offering protection against inflation and economic instability.
Timing and strategy: If contemplating a gold purchase, it may be wise to assess whether the current price fits with your investment strategy and risk tolerance.
Dollar-cost averaging could be a useful strategy to manage investment risk over time.
The government is preparing for a reduction in revenues from small savings schemes and has suggested that the Mahila Samman Savings Scheme might not be extended beyond its current expiration date of March 2025.
This adjustment comes in response to a shift observed from the previous financial year when the government fell short of its small savings target by over ₹20,000 crore.
This anticipated shortfall in small savings collections for the current fiscal year is partly attributed to a growing preference among savers for alternative investment options such as mutual funds and equities. As a result, the government has adjusted its expectations for small savings inflows, budgeting a lower amount for the current financial year. Specifically, the estimate for small savings for FY25 is set at ₹4.20 lakh crore, which is nearly 11% lower than the ₹4.71 lakh crore that was budgeted for the previous fiscal year.
In addition to this, the government also anticipates a decline in inflows under the Senior Citizen Savings Scheme. This expectation follows an exceptionally high collection of ₹1.12 lakh crore in FY24, which was described as a “very, very huge” amount. The government’s projections suggest a tapering off in future contributions to this scheme.
The Mahila Samman Savings Certificate, which offers a fixed interest rate of 7.5% over a two-year term, may also present a potential risk for the government. If interest rates begin to decrease, the fixed coupon could become a burden. As a result, there is a possibility that the government may choose not to renew the scheme when it concludes in March 2025.
The lower-than-expected small savings estimate has influenced the government’s decision not to reduce its gross market borrowing in the full budget. Although the government could have opted to lower its borrowing, it chose not to do so to maintain transparency and accuracy in its budget figures. Officials have indicated that this decision was made to ensure that the budget remains as clear and precise as possible.
Meanwhile, Ajay Seth, the Secretary of the Department of Economic Affairs, has informed CNBC-TV18 that, as is customary, a review of the fiscal position will be conducted at the revised stage of the budget estimates. During this review, the government will assess its market borrowing needs and make any necessary adjustments based on the updated fiscal outlook.
This approach reflects the government’s commitment to managing its finances prudently while adapting to changing economic conditions and investment trends. The planned review will provide an opportunity for further evaluation of fiscal strategies and borrowing requirements in light of the evolving economic landscape.
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