Prime property prices across 46 cities globally increased at an average rate of 8.2% in the year to June 2021, up from 4.6% in March.
Until now, the pandemic-fuelled house prime boom was most evident in the mainstream market but the prime sector has now surged ahead. Prime property prices across 46 cities globally increased at an average rate of 8.2% in the year to June 2021, up from 4.6% in March, according to Knight Frank’s ‘Prime Global Cities Index Q2 2021’ report.
By comparison, mainstream prices across 150 cities increased by 7.3% on average in the year to Q1 2021. Toronto leads this quarter’s results, recording annual prime price growth of 27%, driven by strong buyer appetite and low inventory levels. Despite a recent raft of cooling measures, the next three rankings are occupied by key Asian cities – Shanghai (21%), Guangzhou (20%) and Seoul (20%). Miami (19%) completes the top five this quarter.
Interestingly, the proportion of cities registering prime price growth has increased only marginally to 76%, instead it’s the scale of growth amongst the top-performing cities that is behind the index’s acceleration.
Last quarter, the top-performing city recorded annual prime price growth of 19%, three months on four cities exceed this threshold. Other hotspots include Canadian and US cities which, on average, registered annual price growth of 16% over the 12-month period.
As per the report, Delhi moved down five spots in the latest index at 37th rank in the second quarter of 2021. It saw a marginal decline of 0.2% year-on-year (YoY) in prime residential prices, leading to the drop in global position from 32nd rank in Q1 2021 to 37th rank in Q2 2021. The premium micro-markets of the city remained unchanged on a QoQ basis in Q2 2021 to record an average price of Rs 33,572 per sq ft.
Mumbai and Bengaluru also moved down to 40th and 43rd rank in Q2 2021 compared to 36th and 40th rank in Q1 2021, respectively. Bengaluru in the global index saw a decline of 2.7% in terms of annual capital value change in the prime resident market to an average price of Rs 19,200 per sq ft. Whereas Mumbai’s prime residential market registered a marginal decline of 1.1% with an average price of Rs 63,697 per sq ft.
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. The Prime Global Cities Index is a valuation-based index tracking the movement in prime residential prices in local currency across 45+ cities worldwide using Knight Frank’s global research network.
According to Knight Frank’s research analysis, 35 cities witnessed a rise in prime residential prices in Q2 2021 (YoY). Around 13 cities registered double-digit priced growth up from just one a year ago. Prime prices across 46 cities increased at an average rate of 8.2% in the year to June 2021, up from 4.6% in March. The average annual increase in prime prices was 16% across the six North American cities tracked by the index. According to the report, 22% of the global cities registered flat or decline in price growth.
THE KNIGHT FRANK PRIME GLOBAL CITIES INDEX Q2 2021
(RANKED BY ANNUAL % CHANGE)
Source: Knight Frank Global Research
Notes: ¹ Based on top-tier of mainstream market in metro area ² Based on all contracts above Yen100m 3 Provisional
Commenting on the same, Shishir Baijal, Chairman and Managing Director at Knight Frank India, said, “Despite the ongoing COVID-19 pandemic situation, the residential segments globally have outperformed when compared to the corresponding period of Q2 2020. This can be attributed to a strong buyer appetite for residential due to extended time spent indoors, appreciation for larger homes and low-interest rates regime followed by central banks globally. An easing of travel rules in some markets, a surge in safe-haven purchases by domestic buyers, stamp duty holidays, and an overall reassessment of lifestyles have helped the prime segment recover quickly from the pandemic impact and record strong growth. Prime property prices in India are yet to catch-up with this global trend.”