The lingering effects of the pandemic, rising interest rates, and a tense geopolitical environment are expected to temper the growth of Mumbai’s prime residential prices in 2023, a real estate report said.
The study titled ‘Prime Global Residential Forecast for 2023,’ conducted by the global property consultant Frank Knight India said Mumbai’s premium and luxury residential segment might grow by 3 per cent year-over-year (YoY) in 2023, down from 5 per cent YoY growth as of November 2022.
It said prime residential prices globally are expected to witness a 2 per cent YoY growth in 2023, a moderation from the 2.7 per cent predicted six months ago.
Despite a reduction, the international property consultant said the aggregate price growth in 2023 will remain above the level seen in six of the last 10 years across Knight Frank’s prime residential markets.
Table Showing Prime Price Forecast for 2023
City |
Annual % change
2023 (forecast at Nov 22)
2022 (estimate at Nov 2022)
Dubai
13.5%
50%
Miami
5%
10%
Dublin
4%
8%
Lisbon
4%
6%
Los Angeles
4%
8%
Madrid
4%
6%
Paris
4%
6%
Singapore
4%
5.5%
Zurich
3.5%
8%
Monaco
3%
3%
Mumbai
3%
5%
Shanghai
3%
2%
New York
2%
4%
Tokyo
2%
2%
Vienna
0.5%
2.2%
Auckland
0%
-14%
Berlin
0%
3%
Geneva
0%
3%
Sydney
0%
5%
Melbourne
-1%
4%
Hong Kong
-1.5%
0%
Edinburgh
-2%
7%
Vancouver
-2%
-1%
London
-3%
3.5%
Seoul
-3%
-6%
Source: Knight Frank Research
Commenting on Mumbai’s prime price forecast in a press release on Tuesday, Shishir Baijal, chairman and managing director of Knight Frank India, said, “Although there are strong geopolitical headwinds, we believe domestic demand is largely ring-fenced with strong demand drivers in place.”
He added that “a strong sense for owning better and bigger houses coupled with a resilient domestic economy and amenable house price is giving comfort to such buyers. Hence, monetary tightening action globally will have only a moderate impact as reflected in the 2023 price forecasts.”
Furthermore, amongst the top 25 cities tracked globally, prime prices in 15 of the 25 cities are expected to increase in 2023, while 11 cities are expected to witness weak price growth. However, despite mounting economic headwinds, Zurich, Vancouver, Paris, and Singapore are expected to witness strong price growth in 2023 than previously anticipated, primarily due to a dearth of supply, policy shifts, or a weak currency, which is helping to attract foreign demand.
Kate Everett Allen, head of global residential research at Knight Frank, said, “Although the prime markets are less affected by increases in mortgage rates, they are not immune. The transition from a seller to a buyer’s market is already underway across most prime residential (markets). However, prime prices would need to drop by 30-40% in some cities to return to their pre-pandemic levels of 2019.”
