Mumbai ranks 3rd after Manila, Dubai in Knight Frank Prime Global Cities Index, sees 10% YoY growth in luxury home rates

Mumbai has secured the third position in the prestigious Prime Global Cities Index for Q4 2023, a testament to the city's burgeoning luxury housing market. Mumbai witnessed an impressive 10 per cent year-on-year (YoY) growth in prime residential prices, driven primarily by affluent homebuyers seeking lifestyle upgrades against the backdrop of a robust economic environment, according to Knight Frank's latest report, released on March 20.

The Prime Global Cities Index, which tracks the movement of prime residential prices across 45 cities worldwide, saw Mumbai leapfrog five places from its 8th position in Q4 2022 to claim the third spot. This remarkable surge highlights the city's growing appeal among high-net-worth individuals and the resilience of its luxury housing segment.

Shishir Baijal, Chairman and Managing Director at Knight Frank India, attributed the strong growth in prime prices to the surge in demand witnessed in the residential segment across markets in India. "With homebuyers increasingly prioritising lifestyle upgrades, bolstered by the nation's stable economic outlook and positive market sentiment, this segment should likely see price levels continue to elevate in the near term," he stated.

The report also shed light on the performance of other Indian cities. The Delhi National Capital Region (NCR) climbed from the 28th rank in Q4 2022 to the 16th position in Q4 2023, recording a 4.2 per cent YoY growth in residential prices. However, Bengaluru witnessed a decline in ranking, slipping from the 20th place in Q4 2022 to the 27th rank in Q4 2023, despite recording a 2.2 per cent YoY growth in residential prices.

Globally, the Prime Global Cities Index saw an average annual price rise of 3.7 per cent across 45 markets in the 12 months ending December 2023. Manila claimed the top spot with a 26.3 per cent annual rise in prices, followed by Dubai with a 15.1 per cent YoY growth.

Liam Bailey, Knight Frank's Global Head of Research, acknowledged the impact of the rate-tightening cycle on sales volumes but expressed optimism for the future. "The biggest impact of the rate tightening cycle in the past 12 months has been on sales volumes, which have fallen in most markets by around 10 per cent to 20 per cent. While prices did initially fall as rates rose in 2022, as supply has been squeezed prices have ticked up. Rate cuts in the second half of 2024 will add further impetus to the market," he said.

As the Indian economy continues to gain momentum and affluent homebuyers prioritise lifestyle improvements, the luxury housing sector in cities like Mumbai is poised for further growth, attracting both domestic and international investors alike, say industry observers.