Prices of prime global residential markets likely to rise by 2% in 2021: Knight Frank

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Updated: November 24, 2020 1:44 PM

Delhi’s prime residential market has performed better than Mumbai and Bengaluru in Prime Global Cities Index Q3 2020.

Bengaluru ranked 34th with a decline of 1.4% annual price change for the period Q3 2019 – Q3 2020.

The prime residential prices across the 22 cities (on average) are expected to remain static in 2020, before rising by 2% in 2021, according to a report by Knight Frank.

The ‘Prime Global Forecast 2021’ report says the prime residential market of Mumbai, though expected to see a flat 0.0% annual price change in 2021 (Dec 20 – Dec 21), is likely to witness a buoyancy in demand for the prime properties. Delhi’s prime residential market has performed better than Mumbai and Bengaluru in Prime Global Cities Index Q3 2020.

Shanghai and Cape Town lead the forecast for 2021 with annual price growth of 5% forecast in 2021 whereas Buenos Aires is expected to be the weakest-performing global city, with prime residential prices falling by -8.0% in the same year.

Knight Frank’s research analysis expects 20 of the 22 cities to see prices remain flat or increase in 2021, a slight reversal of the trend seen in 2020, where analysts expect nine cities to end the year with lower prices.

Besides the forecast, Knight Frank, through its Prime Global Cities Index Q3 2020, has also shared a 12-month and 3-month price change for the prime residential markets. The report tracks the movement in prime prices across 45 cities. A year ago, the index rose at a rate of 1.1% per annum, climbing to 1.6% by the end of September 2020.

Shishir Baijal, Chairman and Managing Director at Knight Frank India, said, “With the modest price correction in the Indian real estate sector, post-lockdown, the luxury market has seen significant traction. Buyers are responding favourably to residential purchase across segments including luxury as sale prices have corrected in the last few quarters making investment in property attractive. It is also not surprising that those markets that are already witnessing an economic rebound have moved higher in the rankings in this quarter. In this period of uncertainty, the Knight Frank Prime Global Cities Index still registers a prime price growth across the globe despite the pandemic.”

Key observations for Prime India markets:

# Delhi’s prime residential market performed better than Mumbai and Bengaluru. Globally, the city ranked 27th with a 0.2% annual price change for the period Q3 2019 – Q3 2020; with a decline of 0.1% price change in Q3 2020 compared to the previous quarter.

# Mumbai ranked 33rd with -1.3% annual price change for the period Q3 2019 – Q3 2020. The city saw also saw a decline of 0.7% price change in Q3 2020 compared to Q2 2020.

# Bengaluru ranked 34th with a decline of 1.4% annual price change for the period Q3 2019 – Q3 2020. The city registered a price decline of -1.5 % in Q3 2020 compared to the previous quarter.

Kate Everett-Allen, head of international residential research at Knight Frank, said, “From health to economics, 2020 saw the world upended. Our latest data, however, shows that prime property markets were largely resilient. As we look to 2021, clearly there are challenges ahead. Europe is currently in lockdown in some markets, and most fiscal stimulus measures are set to taper off in early 2021. The concern for investors is that rents are declining in several key cities; due in part to the absence of international students, but also due to a surge in supply as landlords switched from holiday lets to long-term rentals. Taxation will be a big theme next year too as all eyes will be on government plans to replenish public coffers. From proposed wealth tax changes (Spain, Canada) to higher capital gains taxes (US and UK), the tax landscape looks set to shift.”

Commenting on the report, industry experts said that it is certainly a good time for homebuyers to take the plunge.

Ram Raheja, Director, S Raheja Realty, said, “With the prices of prime global residential markets expected to rise by 2% in 2021, it is certainly a good time for homebuyers to take the plunge. Narrowing it down to Mumbai, one of the most prime locations in India; with both demand and prices expected to rise, it is a great time to buy a house. The current stamp duty reduction until December 31 makes it more lucrative, especially for big ticket purchases. After witnessing volatility, people are now looking for reliability as a major factor and real estate is the most promising asset-class to cater to this need. Hence this trend will sustain and in fact further strengthen.”

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