As per Knight Frank’s Prime Global Cities Index, which tracks the movement in luxury residential prices across 45 cities in the world, Mumbai and Bengaluru have reported one of the slowest growths in price appreciation in the first quarter of this year. Luxury housing constitutes the top 5% of the housing market.
Threat of trade war
According to the index, luxury residential prices have registered its lowest rate of annual growth since the last quarter of 2009. Two years ago, prime property prices were rising at an average rate of 4.3% per annum, which has now slowed to 1.3%, Knight Frank said.
The consulting firm has attributed the dip in growth during the first quarter of 2019 to the looming threat of a global trade war, uncertainty surrounding Brexit and the International Monetary Fund’s projection that 70% of world’s economies would see a slowdown in growth this year.
As per the findings, Delhi has secured the 7th position by reporting prime property price growth of 5.8% on 12-month and 4.4 % on three-month basis. Bengaluru at 20th position has witnessed a growth of 2% on 12-month and 0.8% on three-month basis. Mumbai, the commercial capital which houses hundreds of billionaires of the country, is ranked 31. It registered a dismal growth by 0.6% on 12 month and 0.3% on three-month basis, indicating lack of demand in this sector.
Stagnant market
Shishir Baijal, chairman and managing director, Knight Frank India, said, “The Indian residential market has been stagnant for a considerable period of time with sales velocity, especially of prime property, remaining slow, causing significant inventory overhang across major markets.” He added, “Further, developers have also shifted their focus on higher traction segments of the market — affordable and mid-segments — due to the concentrated demand and the conducive environment created for these segments on the back of policy reforms and sops.”
Mr. Baijal, however, said that a growth in the prime property market across key Indian cities should be viewed as a positive sign and going forward the progress for the next couple of quarters should be tracked to ascertain that the sector was moving towards recovery.
Top 7 cities in Europe
Globally, European cities continued to outperform with seven of the top 10 rankings this quarter from the continent. Berlin (14%), Frankfurt (10%), Edinburgh (8%) and Paris (8%) are at the top, while, Russia and the Commonwealth of Independent States have emerged as the strongest performing world region.