Commercial Real Estate

Mumbai, Delhi & Bangalore Among Most Globalised Emerging Cities

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Mumbai, Delhi & Bangalore Among Most Globalised Emerging Cities emerging cities of the world
Mumbai, Delhi and Bangalore – all tier-I cities of India – rank at No. 4, 14 and 18 among most globalised emerging cities (see table below) in a new report titled Globalisation and Competition: The New World of Cities. Published by JLL, the report reveals interesting information about how ‘emerging world cities’ are integrating into the global economy; have become centres of demand-supply; the new world order of cities and how leading Indian cities stack up in all of these indices.
‘Emerging world cities’ are the business capitals of large domestic economies, and experience many of the scale, governance and implementation challenges of more established regions. Often supported actively by their national governments, they are in a process of economic adjustment and urban and metropolitan restructuring to optimise the benefits of global engagement.
Table: Most globalised emerging cities*
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*With a GDP per capita below US$25,000.

(Source: GaWC, 2013; Brookings Global Metro Monitor, 2015)
In fact, the ongoing Globalisation and World Cities (GaWC) studies reveal big changes in the number and type of cities that are taking on international functions. Today, of the 100 most globalised cities according to GaWC data, 44 are middle-income and lower income cities with real GDP per capita of below US$25,000.
Nearly half of the cities that are driving the process of globalisation are located in the so-called ‘developing’ countries. They vary considerably in size, political context and development path. Their per capita income (by PPP) diverges significantly – cities such as Warsaw and Moscow are beginning to enter upper-middle or upper income status, while Indian and some Chinese cities are still closer to US$5,000 per annum. But the signs are that they all becoming rapidly integrated into the global economy, and their economic performance has become closely indexed to global demand.
‘Emerging world cities’ are centres of demand, supply
Between now and 2030, disposable incomes in Shanghai and Beijing are set to rise by over US$350 billion – more than in London and Tokyo – while consumer spending may increase by more than US$250 billion. Outside China, centres such as Jakarta, Istanbul and Mumbai are also seeing an urban consumer demand surge. This growth has big implications for the growth of the retail sector, and for the demand and supply of different kinds of space in these cities.
‘Established world cities’ used to host the overwhelming share of large global firms, but this picture is rapidly changing with 26% of firms having revenue above US$1 billion now being based in ‘emerging world cities’, and having the potential to reach 50% by 2025.
The new world order of cities
Mumbai and Delhi – high potential megacities
Manila, Mumbai, Delhi and Jakarta are not only performing well at attracting real estate investment and outsourcing activities but also have more chronic infrastructure supply challenges compared to cities mentioned above. Transnational firms find these cities attractive as they expand their operations in South and South-east Asia, because of low costs and huge consumer market opportunities; however they face considerable urban infrastructure shortages.
Each of these cities possesses huge scale and massive future potential. Globally, Mumbai is the 17th largest city-economy and the 8th biggest city by population while Delhi is the 20th largest city-economy and the 3rd largest by population. While Mumbai is forecast to see an impressive 7% p.a. GDP growth over the next five years, Delhi is predicted to experience an increase of 9% over the same period.
However, both cities face a range of challenges. For example, Delhi is by some measures the most polluted major city in the world and faces massive shortfalls in its transport infrastructure. Mumbai, likewise, is one of the world’s least resilient cities when it comes to vulnerability and adaptive capacity in the context of natural disasters, climate change, infrastructure, resources, etc. It also has high pollution levels. Both cities score poorly for liveability but Mumbai is seen as much more globalised than Delhi.
For these types of cities to capitalise on their potential, their first priorities remain leadership, governance and coordination – all prerequisites to quality of life and economic ambitions. They need to reduce the complexity of preparing, assembling and executing projects, which prevents capital investment budgets from being fully deployed on a year-by-year basis. They also rely on national policy to devise more effective plans for the national ‘system of cities’, and formal recognition from the national level of the unique burden of being a large globalising metropolitan area.
This was also the case in Mumbai until last year. However, there has been substantial improvement from then on. Steps have been taken to improve transparency, strengthen governance, and reduce red-tapism as also the complexity in execution of projects. For example, Mumbai civic corporation will cut building permissions from 150 to 70 and reduce the time taken to give building permissions within 90 days. Maharashtra state government has asked civic bodies to digitalise the permissions required by developers to bring in transparency.
Bangalore figures among agile higher-quality emerging cities
Agile higher quality emerging cities such as Bangalore, Warsaw, Santiago, Colombo and Chengdu have attractive business environments, extensive development opportunities and comparatively well-educated populations that are allowing them to find niches in global supply chains.
Many have effectively leveraged property taxes, local user fees, and the monetisation of public land to invest in public services. These medium-sized emerging cities have some low-income housing and transport challenges, but fewer of the sprawling slum problems of other larger emerging centres. Typically, they are actively building international functions within the wider knowledge economy.
Bangalore’s strength is led by a strong knowledge economy, built around IT software and outsourcing. It records a high number of high-tech start-ups and is the world’s number one outsourcing location. The city has globalised rapidly, and this growth is expected to continue – with 8% GDP growth p.a. expected over the next 5 years.
While it lacks the scale of Mumbai and Delhi, Bangalore performs remarkably well on real estate indicators. Along with this, the concentration of high-value activities marks Bangalore out as an ‘agile, higher quality emerging city’. Bangalore’s smaller scale has offered the city greater flexibility than the likes of Mumbai, Delhi and allowed the city to specialise successfully. As a result, the city has developed its own ‘niche’ on the global stage, while avoiding many of the pitfalls of mega-cities. The city, therefore, joins the likes of Guangzhou and Shenzhen in harnessing technology to spur growth and leapfrog other emerging cities; while Dubai remains perhaps the most successful example of this kind of city.
The report authored by The Business of Cities and published by JLL, builds a new typology of cities based on the latest city performance indices. This research makes a breakthrough by adding three new concepts to the cities lexicon: ‘established’ world cities, ‘emerging’ world cities and ‘new’ world cities.

- by Anuj Puri, Chairman and Country Head, JLL India

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