Mumbai most expensive prime residential market sees meagre growth
Mumbai, 20 August, 2019: International Property Consultant Knight Frank in its recent report Prime Global Cities Index has ranked New Delhi as the 10th fastest growing prime market in the world with an annual capital value growth of 4.4% in Q2 2019. The report tracks the movement in luxury residential prices across 46 cities globally.
The index highlights that luxury residential prices have registered an average increase 1.4% in the year to June 2019 period. Bengaluru (2.8%) and Mumbai (0.8%) were ranked 15th and 30th on the list respectively.
Berlin continues to lead the index, however, its rate of annual growth has slowed from 14.1% in March 2019 to 12.7% in June 2019. Frankfurt, by comparison, has seen its annual price growth increase from 9.6% to 12.0% over the same period and managed to secure second rank replacing Moscow. Moscow slipped to third rank in Q2 2019.76% (35 out of 46 cities) registered price growth in the year to June 2019. Of the eleven that saw prices decline, Istanbul (-9.9%) and Vancouver (-13.6%) were the weakest markets.
New Delhi, by virtue of limited supply of luxury properties saw a rise in weighted average of capital values which were recorded at INR 33,511 per sq ft recording an annual rise of 4.4%. New Delhi has slipped three places in the overall ranking in Q2 2019 from 7th position in Q1 2019 to 10th position in Q2 2019.
Bengaluru featured at the 15th rank of the Prime Global Cities Index as compared to 20th rank in Q1 2019. Bengaluru recorded a weighted average capital value of prime markets at approximately INR 19,000 per sq. ft. recording an annual increase of 2.8%. Mumbai features at the 30th rank with a mere 0.8% 12-monthly change, recording a weighted average capital value for prime properties at INR 64,764 per sq. ft.
|KNIGHT FRANK PRIME GLOBAL CITIES INDEX Q2 2019|
Ranked by annual % change
Source: Knight Frank Research
Sluggish economic growth explains the wave of interest rate cuts evident in the last three months as policymakers try to stimulate growth. Much hinges on the next three months with stronger headwinds on the horizon, the index is expected to moderate further in the second half of 2019 before strengthening in 2020.
“The marginal increase in prices, along with poor buyer sentiment suggests that demand for luxury homes is likely to remain tepid. Continuous influence of global economic headwinds has prodded leading policymakers in developed and emerging markets alike to respond through policy measures including cut in interest rates.
When it comes to the prime residential markets, key European cities lead with the highest growth, these markets have become increasingly popular investment hubs for European and global investors with a growing presence from Chinese residential buyers. Back home, the Indian residential market continues to focus on affordable and mid–segments due to structural reforms supporting this segment.
However, a growth in the prime property markets in Mumbai and Bengaluru could be viewed as a sign of stabilisation. Regardless of a slip in rank for the Delhi market, a positive 12–month increase 4.4% is healthy as we track the most prime and mature residential pockets in case of Delhi.” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
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