Luxury home prices in Mumbai expected to fall by 1% in 2020 as buyers continue to tread cautiously: Knight Frank

by Shrutee K/DNS

Mumbai ranked 7th globally in terms of expected rise in luxury home prices in 2020

Sales in Mumbai expected to fall slightly, however, supply to drop significantly in 2020

Paris leads the prime residential forecast for 2020 with an expected price growth of 7%

Mumbai, December 9, 2019: International property consultant Knight Frank in its latest report - Prime Global Forecast 2020 - has ranked Mumbai as the 7th global city in terms of expected price appreciation (in percentage terms) of prime residential properties, and estimated that prices of luxury homes in areas such as Cuffe Parade, Napean Sea Road, Colaba, Lower Parel, Worli, Tardeo, Juhu, Bandra Kurla Complex (BKC), Santacruz(W), Bandra(W), Khar(W) and Prabhadevi are set to fall by 1% in 2020. 

The buyers of prime residential properties in Mumbai are expected to remain cautious in 2020 due to deteriorating economic environment impacting market liquidity and an additional 1% stamp duty being levied by the Maharashtra government, taking the total to 6%. 

KNIGHT FRANK PRIME GLOBAL FORECAST 2020

Rank	Cities	Price appreciation expected in 2020 (Values in %)	1-year price change in % (Q3’18-Q3’19)	10-year price change in % (Q3’09-Q3’19)
1	Paris	7	4.2	47.1
2	Berlin	5	6.5	145.7
2	Miami	5	1.5	51.4
3	Geneva	4	5.6	19.6
3	Sydney	4	2.6	69.8
4	Madrid	3	4.2	35.4
4	Singapore	3	1.2	41.6
4	Melbourne	3	2.0	64.1
5	Los Angeles	2	0.7	53.0
5	London*	2	-3.9	40.9
6	Hong Kong	Static	-1.3	45.8
7	Mumbai	-1	0.8	12.7
8	Dubai	-2	-3.7	-7.8
9	New York**	-3	-4.4	23.5
10	Vancouver	-5	10.2	85.3

* Forecast as at Dec 2018, new forecast available post UK election **Manhattan

According to Knight Frank Prime Global Cities Index Q3 2019, while Mumbai was ranked as the 28th fastest-growing prime residential market in the world, registering a 0.8% YoY increase in average capital value in Q3 2019, the prices had actually remained stable in the past three months. In the last decade, Mumbai has seen a 12.7% price appreciation in prime residential properties. The Index also highlighted that the change in prime residential prices for all 45 cities tracked by the Index averaged 1.1% in the year to Q3 2019, growing at the slowest rate in a decade.

Both demand and sales of prime residential properties in Mumbai are expected to see a slight fall, while the supply of luxury homes is estimated to drop significantly in 2020, according to Prime Global Forecast 2020. The average capital values of prime residential properties in Mumbai currently stands at Rs 64,775 per sq. ft, making it the most expensive city for buying luxury homes in India.

Paris leads the prime residential forecast for 2020 with an expected price growth of 7%, followed by Berlin and Miami in the second place with a 5% growth each, and Geneva and Sydney at the third place, with an expected prime residential price growth of 4% each. 

A prime residential property is defined as the most desirable and most expensive property in a given location, generally defined as the top 5% of each market by value. In the Prime Global Forecast 2020 report, Knight Frank’s analysts provide their price forecast for 2020, taking account of the latest economic indicators, supply, demand and sales trends.

The report also highlights the 10 biggest risks to prime residential markets in 2020 as global economic slowdown, global trade war, local economic slowdown, changes to property market regulations, geopolitical crises, change in government/upcoming election, emerging market volatility, oversupply of luxury homes, currency instability, Brexit, US Federal Reserve rate changes and commodity prices. 

“Despite interest rates remaining low, sales volume of the prime end of the market in global top tier cities has largely drifted lower during 2019. Prime residential market in Mumbai has also echoed the same sentiment. In India, the segment has now become a business for only the organised and well-funded players to venture into. Each world region will be marked by different risk set to prime property. Brexit will play as a top risk for Europe whereas economic slowdown and change of property market regulations will weigh on Asian markets,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.