Delhi will have the fastest growth of any city in Asia, with the economy of the city-state likely to become almost 50% larger in 2021 than it was at the end of last year.
Indian cities are set to expand the most across the Asian region, with growth speeding up from the past five years, according to a new study from Oxford Economics, which has ranked Asia's 30 largest cities.
With financial and business services projected to be the fastest growing sector in India, the capital's dominance in this industry will lead to higher growth and higher incomes.
“Limits on foreign ownership of Indian companies are gradually being reduced or eliminated,“ wrote Mark Britton, lead economist on the report. “In the short term, this is conducive to strong growth in Delhi's professional services sector, as overseas investors seek advice on possible deals, while in the long term, it should mean steady income streams for such businesses.“
Consumer companies such as Japan's Muji are also betting on such a change. Muji's parent company , Ryohin Keikaku Co, sees India becoming its second largest international market, after China. There is also Amazon.com Inc's Indian unit, which is seeking approval to invest in a food supply chain and take advantage of government moves to ease rules on foreign retailers.
China's expansion is likely to slow, although the largest five cities there will still be recording growth rates of 6% or more. There will be a slight slowdown across the region amid moderating import demand from China, with growth expected to average 4.2% per year over the next five years up to 2021, down from 4.5% in 2012-2016.
Even so, that growth is still much faster than in the developed economies and cities in the region -and that's a big opportunity for companies. Starbucks Corp plans to almost double the number of stores it has in mainland China by 2021, while McDonald's Corp plans to add 2,000 new restaurants over the same period.
Both companies recently announced they were buying out their partners in Mainland China and taking control of operations.
However, there are significant differences across the Asian region. Japanese cities are likely to remain at the bottom of the growth table amid a challenging demographic outlook, with Osaka last in the rankings as its working-age population falls by approximately 1% per year, the report said.
Tianjin is forecast to clock the fastest growth in China, given that it has a large manufacturing base and one of the nation's busiest ports. However, as the services sector expands, the manufacturing and shipping industries may prove to be less supportive in future.
Ho Chi Minh, the largest metro in Vietnam, was the only non-Indian city in the top five, reflecting the city's success in establishing itself as a manufacturing centre, as well as its strong services sector.