Bengaluru in top 10 in investment destination

Based on a study by PricewaterhouseCoopers (PwC), Bengaluru is the 10th best real estate investment destination for 2012 among the most favored real estate investment destinations in the Asia Pacific region.This is especially heartening given that Bengaluru has maintained its position from last year, while the perennial superstars Mumbai and New Delhi have dropped from 3rd and 5th position last year to 15th and 12th position respectively this year.

A weak rupee can derail India's real estate recovery

Given the volatility of the Rupee, it is expected that large foreign investor confidence is shaken at least in the short run. However, one can argue that depreciating Rupee will draw significant number of NRIs to the Indian real estate market for long terms investment. Here is our mixed prognosis.

1. Foreign capital will slowly return to dampen the capital outflow that has put downward pressure on the currency as the early indicators show
2. With projected inflation stability thus output recovery will boost confidence in the economy and overall demand
3. Interest rate will remain high, perhaps till second quarter. RBI is expected to maintain anti-inflationary credentials to calm the jittery markets.

According to National Housing Bank's Residex index, which tracks housing prices in 15 cities, prices in small cities like Faridabad, Patna, Ahmedabad, Chennai, Surat, Kochi, Bhopal and others have seen a 20-30% jump in recent months.

Moody's upgrades India's foreign currency rating

The revision in ratings will help increase investor comfort at a time India is battling high inflation, low growth, rising fiscal and current account deficit and low sentiment. Justifying the December upgrade, Moody's had said, "Diverse sources of Indian growth have enhanced its resilience to global shocks". Moody's has now lifted the short term country ceiling on foreign currency bank deposit from NP (not prime) to Prime (P-3), suggesting acceptable ability to repay short-term obligations.