With foreign companies continuing to form new joint ventures with large Indian corporations, more and more expatriates are looking to buy or rent property in Mumbai, Colliers International has reported. ‘The capital and rental market will witness a continuous upward pressure’, said the firm in its latest overview of the Indian property market.

The South Mumbai residential market has witnessed a considerable increase in demand owing to huge influx of expatriates and with demand exceeding supply, the rental and capital values in this part of the city shot up. Limited availability in prime locations means suburban markets are emerging as attractive alternatives, said the firm.

Colliers rates Malabar Hill, and Worli as the most expensive areas to buy – all commanding around £520 per square foot.

The prime areas in Delhi are said to be in the south Delhi region comprising of Vasant Vihar, Westend, Shanti Niketan and Anand Niketan which are close to foreign embassies, the airport and commercial areas. However, Panchsheel park and Gulmohar Park where owner apartments of more than 3500 square feet are available at reasonable prices, have become more popular.

Rentals likely to have stabilised in the fourth quarter after 30 to 35 per cent rises in the third quarter. This is because multinationals, embassies an UN agencies have started moving towards less expensive areas so as to be able to meet their rental budgets.

In Chennai demand from expatriates is continuing to rise in central and south districts of the city, not least because of the arrival of multinationals such as Nokia, BMW, and Caterpillar. So here also there is a ‘demand shift’ starting towards the less expensive suburbs. Meanwhile huge demand for residential apartments is being generated by the IT corridor and development of large IT parks on Old Mahabalipuram Road. The 22km stretch of the road ‘is buzzing with real estate development’, said Colliers.

‘There has been a significant development in south Chennai with a steep increase in land values. With limited stock in prime residential areas, apartment prices have been booming in these areas and have gone up by approximately 25 to 30 per cent in the last six months’.

In Bangalore demand for residential property also remained ‘buoyant’.

The third quarter of 2006 saw price rises of between 15 and 40 per cent in some areas. Again a steady influx of expatriates and regional executives kept demand high.

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