Mumbai ranked 24th among 41 cities globally with 1.1 per cent price rise of luxury homes for the year ended March 2017, property consultant Knight Frank India said in a report on Tuesday. Mumbai is the only Indian city holding on to a positive price trend and price growth of prime housing there has been growing.
Guangzhou in China was first in the global list of 41 cities with 36.2 per cent price growth, according to Q1 2017 (January-March) Knight Frank Prime Global Cities Index. The index tracks the movement of luxury residential property prices across 41 cities.
Delhi (ranked 35) and Bengaluru (ranked 29) were the two other Indian cities that figured in the global list. Both the cities saw negative price growth for the year ended March. “Luxury homes in Mumbai recorded 1.1 per cent price growth making it the only Indian city holding on to positive territory,” it said in a statement. However, the price growth for prime housing properties in Mumbai has been on a declining trend.
“Delhi and Bengaluru, the other two Indian cities, on the global list saw a negative growth of -2.6 per cent and -0.2 per cent, respectively,” it added. There are a total of 13 cities which saw negative price growth in the luxury segment, led by -8.3 per cent growth in Istanbul, -7.3 per cent in Moscow and -7 per cent in Zurich.
Knight Frank India Chief Economist and National Director Samantak Das said that luxury housing segment was probably still recovering from the demonetisation decision. The government last November withdrew old notes of Rs 500 and Rs 1000 from circulation. This hit the real estate market, wherein a significant component of the price is paid in cash.
Das said the national capital has seen negative growth of almost 3 per cent in the quarter-ending March as against a year-on-year price growth of 3 per cent until two years back. Bengaluru recorded negative growth for the first time in five years, he said. In 2015, the city saw a year-on-year growth of 13.6 per cent.
Globally, financial hubs such as Zurich (-7 per cent), London (-6.4 per cent) and Milan (-0.9 per cent) have recorded negative growth. “Mumbai did better than many global financial centres but the price growth in the quarter-ending March 2017 has taken it back to Q1 2013 levels after touching a high of 3.2 per cent price growth in 2015,” Das said.
Chinese cities of Guangzhou, Beijing and Shanghai topped the index with an average price growth of 26.3 per cent. Luxury prices in world’s tech hubs are outperforming the world’s financial centres. Emerging technology hubs such as Seoul (17.6 per cent), Stockholm (10.7 per cent), Berlin (8.7 per cent) and Melbourne (8.6 per cent) outshined established global financial centres, the report said.
Overall the index climbed 4.3 per cent in the year to March. “Although the world is in a state of political and economic flux at present and inevitably we are seeing a degree of safe haven investment flows into luxury property markets, the index’s upturn this quarter can largely be attributed to China’s cities which continue to dominate the top tier of the rankings,” the report said.
Among Asian countries, key cities of Hong Kong (5.3 per cent) and Singapore (4 per cent) are rising up the rankings following years of lacklustre growth. In March, Singapore reduced its sellers’ stamp duty from 16 per cent to 12 per cent suggesting a softening in attitude but such a move is unlikely to open the floodgates to speculators given the 15 per cent buyer’s stamp duty for foreign buyers remains in place.
While prices were rising in key US cities, the big story on the North American continent is the acceleration of prices in Toronto — across all price bands. At the luxury level, prices in Toronto were 22 per cent higher, outpacing Vancouver (7.9 per cent) by some margin.