The residential market in Mumbai showed a negative growth of -9.1% during March 20112012,according to the latest Knight Frank Prime Global Cities Index,which compares the performance of prime sales markets across key global cities.
The value of prime property in the worlds key cities fell by 0.4% in the first quarter of 2012.
This represents the indexs first quarterly fall since the depths of the global recession. Overall,the index rose 1.4% in the 12 months to March 2012.
The prime markets in North America performed strongly with prices increasing by 7.7 % on average in the last 12 months
Nairobi (up 24%) was the strongest performer in the last 12 months while prices in Dubai (up 4%) rose the most in the last 3 months
The first three months of 2012 brought with it little new momentum. The Eurozones debt debacle remained at the forefront of the global economic agenda,several critical elections were on the horizon (Russia,France,Greece) and Asias highly-effective cooling measures showed no sign of being relaxed. Against this backdrop some luxury buyers took to the sidelines to observe their markets trajectory.
Despite the overall indexs sluggish performance four prime markets achieved double-digit growth over a 12-month period; Nairobi,Jakarta,Miami and London. Perhaps most surprisingly is the fact that the top five performing cities were spread across four continents North America to be the only continent to appear twice (see overleaf).
London and Singapore are proof that there is still a level of resilience in the prime markets with both cities shrugging off the introduction of new stamp duties in the first quarter of 2012.
In London both prices and applicant numbers increased despite the stamp duty rise to 7% for individuals buying homes over £2 million. In Singapore the new 10% stamp duty for foreign buyers,which was introduced in December 2011,dented demand but not prices,according to Nicholas Holt,Knight Franks Asia-Pacific Research Director.
In Knight Frank’s the overall index will remain subdued in 2012 fluctuating between marginal price falls and rises (with London,Moscow,Jakarta,Nairobi and Singapore expected to be the strongest performers) but it seems unlikely we are on the cusp of a new deflationary cycle in luxury global house prices.
The safe-haven argument still resonates. Capital flight will continue to focus on cities with low political risk,transparent legal systems,good security and ideally those with an HNWI-friendly tax regime.
(Report: Knight Frank Prime Global Cities Index Q1 2012. Views expressed in this article do not represent those of The Indian Express)