This Indian city to see highest rise in prime residential property prices in world next year: Report

With a 5 per cent hike, Mumbai is likely to see the highest increase in prime (luxury) residential prices in 2024, says Knight Frank in its report ‘Prime Global Cities Index Q2 2023’. Improving gross domestic product (GDP) figures, Mumbai’s relative value and investment in infrastructure will be the major influencers in pushing prices higher for the luxury housing market in the city, the report adds.

Financial capital of India has recorded the sixth highest year-on-year growth in prime residential property prices among global cities in the April-June period of 2023. In the second quarter of 2023, the prices of prime residential properties rose by 5.2 per cent year-on-year in Mumbai. With a hike of 3.6 per cent year-on-year in Q2 2023, Bengaluru ranked at 20th position on the list. With an increase of 0.2 per cent year-on-year in the April-June quarter of 2023, New Delhi is positioned at 26 in the table.

Released by Knight Frank, ‘Prime Global Cities Index’ is a valuation-based index tracking the movement of prime residential prices across 46 cities worldwide.

Shishir Baijal, Chairman and Managing Director at Knight Frank India says, “Against the backdrop of sluggish global growth and worries about inflation that defined a significant portion of 2023, the Indian economy stood out as a remarkable achiever. While central banks in major developed economies around the world were announcing unprecedented policy rate hikes, the Indian economy, demonstrating stronger growth momentum and better control over inflation, managed to maintain stability in its policy interest rates over the last two quarters. This distinctive approach led to the persistence of robust sales levels in the residential markets, in contrast to the market reflections of action taken by most other major economies.”

“Besides, coming out of a prolonged stagnation over the last decade, prime property price movement in the country was also positively influenced by strong sales momentum in the category amid limited ready inventory, and increased construction cost in recent years,” he adds.

With a 48.8 per cent rise year-on-year, Dubai witnessed the highest price rise in the prime residential properties in the world in Q2 2023, according to the report. With a 26.2 per cent year-on-year increase in Q2, Tokyo is in the second position. “The average annual growth rate reached 1.5 per cent across the covered markets which indicates a positive shift after a recent period of uncertainty,” the report says.

Nineteen of the 46 cities have witnessed a drop in prime residential prices. New Zealand’s Wellington has seen the steepest fall at 15.1 per cent, followed by 12.9 per cent in Frankfurt and 11.1 per cent in San Francisco, the report says.

Prime residential property price forecast for 2024
Besides releasing the actual price rise data, Knight Frank has also provided the forecast for 26 global prime residential markets for the year 2024. Along with Mumbai, New Zealand’s Auckland will also see a price rise of 5 per cent in the year 2024, the report says. The average price for 26 global prime residential markets is expected to grow by 2 per cent in 2024.

Liam Bailey, Knight Frank’s Global Head of Research said, “Global housing markets are still under pressure from the shift to higher interest rates – but the latest results from the Knight Frank Prime Global Cities Index confirm that prices are being supported by: strong underlying demand,weak supply following disruption to new-build projects during the pandemic, and an ongoing return of workers to cities. As uncertainty over the direction of inflation appears to have reduced in recent months — price adjustments in many markets are likely to be less pronounced than was expected even three months ago.”