Mumbai sees a significant jump in Prime Global Cities Index: Knight Frank
Mumbai's ranking significantly improved from 38th in Q1 2022 to sixth in Q1 2023 for high-end properties.
- Bengaluru and New Delhi also saw an upward shift in their rankings, reaching 16th and 22nd positions respectively.
- Despite the Federal Reserve and other central banks approaching peak interest rates, it is expected that even prime housing markets will continue to face downward pressure.
AdvertisementThree major cities in India, Mumbai, Bengaluru, and New Delhi, witnessed a growth in average annual prices of prime residential properties during Q1 2023. The growth pushed the ranking of these Indian metros in Knight Frank India's 'Prime Global Cities Index Q1 2023'.
Mumbai's ranking significantly improved from 38th in Q1 2022 to sixth in Q1 2023 for high-end properties. Bengaluru and New Delhi also saw an upward shift in their rankings, reaching 16th and 22nd positions respectively, compared to their previous ranks of 37th and 39th, as per the report.
“The Indian economy stood out with steady performance despite concerns around global growth and inflation that marked most of 2022. However, the Indian real estate markets displayed continued momentum in demand, amid concerns of an inflationary environment, and weathered a steep rise in home loan rates over the past 12 months,” said Shishir Baijal, chairman and managing director at Knight Frank India.
In terms of year-on-year increase, Mumbai experienced a 5.5% rise in average prices, Bengaluru saw a 3% increase, and New Delhi recorded a 1.2% increase, all compared to Q1 2022. Globally, Dubai secured the top position with a substantial 44.2% surge in the value of prime residential properties.
Mumbai's sharp rise in the international index can be attributed primarily to the increased demand in the city. While the demand has been robust across all segments, there has been a notable surge in the sale of prime residential properties.
“Particularly, we have seen demand for prime residential property being maintained largely due to three factors, firstly these sets of consumers are less dependent on mortgage support; secondly, the continuous growth in economy has led to an increase and stability in income and lastly the prolonged trend of buying larger homes,” said Baijal.
What’s the index about?
The Prime Global Cities Index is an index that monitors and tracks the changes in prime residential prices in 46 cities worldwide. It uses valuation-based methods and records the nominal prices in the local currency of each city.
The index experienced a decline of 0.4% in the 12-month period ending in March of this year, which is the first decrease since 2009. This is a significant turnaround from the peak growth of 10.1% observed in the fourth quarter of 2021. Dubai witnessed the most rapid increase in prime prices, with a year-on-year growth of 44.2% between Q1 2022 and Q1 2023.
Despite the Federal Reserve and other central banks approaching peak interest rates, it is expected that even prime housing markets will continue to face downward pressure on prices in the coming quarters.
“That said, it is unlikely we will see a correction similar in scale to that seen during the Global Financial Crisis, when the overall PGCI index fell 8.2% from peak to trough in 2009,” says the report.
Early indications suggest that some markets have shown signs of improvement, as 46% of markets experienced quarterly price declines in the second half of 2022, which decreased to 28% in the first quarter of this year, the lowest number since Q1 2021.
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