Indian metro cities' witness decline in luxury home prices

Key Highlights: 

• Knight Frank Prime Global Cities Index on 41 international cities
• Delhi and Bengaluru saw negative trend in index
• Mumbai saw gradual rise in luxury home prices

Indian metro cities have been witnessing declining trend in their luxury home prices, this has further intensified in third quarter for calendar year 2017 (Q32017) -  as an outcome of demonetisation drive, as per Knight Frank Prime Global Cities Index data. 

The index tracks the movement in luxury residential prices across 41 international cities, every quarter. 

Overall, the index registered growth of 4.2% as on September 2017 with 19 cities facing declining trend. 

Among the declining ones were also Indian metro cities with Delhi recording -3.1% and Bengaluru -0.8%. However, prices in Mumbai saw gradual pickup of 0.6% between September 2016 - September 2017. 

Dr. Samantak Das, Chief Economist and National Director – Research, said, "Prime residential markets have been under immense pressure particularly since the event of demonetisation.  While the move had an adverse impact on the overall residential market, luxury homes sales were worst hit. The quintessential wealthy investors known to take interests in such projects are missing courtesy better returns from other investment avenues."

Das added, "Among the top three cities in India the growth in price in this genre has been slowly tapering.  While Mumbai maintained positive growth, albeit at an abysmally low rate, Delhi and Bengaluru witnessed negative growth."

From their positions in the previous quarter - Delhi saw the biggest drop in rankings as it slipped from the 31st to the 36th position. 

The noteban impact is not expected to fade anytime soon on this industry.  Das said,"We foresee the trend to continue for at least 8- 12 months in this end-user driven market.”

On the other hand, Guangzhou continued to top the index with a staggering 36.3% price surge in luxury homes but the overall narrative for China was of a slower growth.

The Asia Pacific dominated the ten rankings, with Seoul (11.2%), Sydney (11.0%) and Melbourne (10.4%) joining Guangzhou and Shanghai.