Mumbai to see the highest rise in residential prices in the world in 2024

  Mumbai to see the highest rise in residential prices in the world in 2024

Mumbai, the financial capital of India, is expected to witness the highest growth in prime residential property prices globally in 2024, according to a report by Knight Frank, a leading real estate consultancy. The report, titled Prime Global Cities Index, forecasts that Mumbai will see a 5% increase in luxury housing prices in 2024, along with Auckland, New Zealand. The report also ranks Mumbai as the sixth fastest-growing city in terms of prime residential prices in the second quarter of 2023, with a year-on-year growth of 5.2%.

  What is the Prime Global Cities Index?

The Prime Global Cities Index is a valuation-based index that tracks the changes in prime residential properties across 46 cities around the world. Prime residential properties are defined as the most desirable and expensive properties in a given location, generally defined as the top 5% of each market by value. The index uses nominal prices in local currency and covers the period from April to June 2023.

 What are the factors driving Mumbai's price rise?

According to Knight Frank, the main factors that are influencing the rise in prime residential prices in Mumbai are:

Improving GDP figures: India's economy is expected to rebound strongly in 2024, after a sharp contraction in 2023 due to the COVID-19 pandemic. The International Monetary Fund (IMF) projects that India's GDP will grow by 9.5% in 2024, the highest among major economies. This will boost the income and wealth of the high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) who are the main buyers of prime residential properties in Mumbai.

Mumbai's relative value: Compared to other global cities, Mumbai offers a relatively lower price per square foot for prime residential properties. According to Knight Frank, the average price per square foot for prime residential properties in Mumbai was $518 in the second quarter of 2023, while the global average was $1,016. This makes Mumbai an attractive destination for both domestic and foreign investors who are looking for value and potential returns in the luxury housing market.

Investment in infrastructure: Mumbai is undergoing a massive transformation in terms of its infrastructure, with several projects such as the Mumbai Metro, the Mumbai Trans Harbour Link, the Coastal Road, and the Navi Mumbai International Airport underway or in the pipeline. These projects will improve the connectivity, accessibility, and livability of the city, and create new hubs of development and demand for prime residential properties.

 How does Mumbai compare with other global cities?

The Prime Global Cities Index report also provides a forecast for the top 26 cities in the world for 2024, based on various factors such as economic growth, supply and demand dynamics, policy interventions, and currency movements. The report predicts that Mumbai and Auckland will lead the pack with a 5% increase in prime residential prices, followed by Singapore and Madrid with a 4% increase. Berlin and Edinburgh are the only two cities that are expected to see a decline in prices, by 1% and 3% respectively. London is expected to see no change in prices.

The report also ranks the cities based on their performance in the second quarter of 2023, compared to the same quarter in 2022. Dubai tops the list with a staggering 48.8% year-on-year growth in prime residential prices, followed by Tokyo with 26.2% and Manila with 19.9%. Mumbai ranks sixth with 5.2%, while Bengaluru ranks 20th with 3.6% and Delhi ranks 26th with 0.2%. The global average growth rate was 1.5%.

   What are the implications of Mumbai's price rise?

The rise in prime residential prices in Mumbai reflects the resilience and attractiveness of the city's luxury housing market, despite the challenges posed by the pandemic and the lockdowns. It also indicates the strong demand and limited supply of high-quality properties in the city, especially in the prime locations such as South Mumbai, Bandra, Juhu, and Worli. The price rise also has implications for the affordability and accessibility of housing for the majority of the population, as it widens the gap between the rich and the poor. Moreover, the price rise may also pose regulatory and environmental challenges, as the government and the developers have to balance the interests of the stakeholders and the sustainability of the city.

 Conclusion

Mumbai is set to see the highest rise in residential prices in the world in 2024, according to a report by Knight Frank. The report attributes this to the improving GDP figures, Mumbai's relative value, and investment in infrastructure. Mumbai also ranks sixth in the world in terms of prime residential price growth in the second quarter of 2023. The price rise reflects the strength and appeal of Mumbai's luxury housing market, but also raises questions about the affordability, accessibility, and sustainability of housing in the city.