Mumbai becomes 16th costliest property market in the world

The hottest property market in India, Mumbai now ranks amongst the top 20 costliest cities in the world. One can buy little less than 1,000 sq ft with a budget of $1 million in few of sought-after localities of country’s commercial capital. Knight Frank’s annual wealth report revealed that with that amount one can buy 237 sq ft space in Hong Kong, which ranks on the second position in the tally.

A year ago, property market of Mumbai ranked 15th in this list, where $1 million could fetch 1,065 sq ft space.

The rapid wealth creation in India is giving rise in Indian financial capital’s ranking on this count. With respect to wealthy population, the country is expected to be the third largest contributor in Asia, after china and Japan by 2022.

Among 314 global cities, Mumbai ranks 47th on the Knight Frank City Wealth Index. The index is derived from four major indicators that are, wealth, investments, lifestyle and future. It is estimated that between 2017 and 2022, Mumbai and Delhi would be among the top 10 markets to witness highest growth in households, earning more than $250,000 annually.

If measured in terms of wealth alone, where in the index evaluates the number of the Ultra High Net Worth Individuals, High Net Worth Individuals (HNWIs) and rate of wealth generation in a city, Mumbai ranks in the top 20 cities, with Delhi at 22nd and Bengaluru at 26th positions.

According to the report, between 2016 and 2017, India’s wealthy population in the prime $5 million-plus category rose to 47,720 individuals recording 21% growth. This is than double the global average of 9%, and one and half times the Asia average of 14%.

Furthermore, between 2017 and 2022, the segment in India is expected to increase by staggering 71%, in terms of estimates. Again, above the Asia’s 61% and the global average of 43%.

Samantak Das, Chief Economist & National Director – Research, Knight Frank India said, “India is one of the major drivers of UHNWI population growth in Asia, which is a bright spot in the global landscape…However, the inclination to invest in property is lower for the ultra-wealthy Indians compared to their global peers. Only 23% wealthy Indians are interested to invest in property (excluding a primary residence and secondary home) in India compared to 43% globally.”

Between 2016 and 2017, nation’s affluent class in the super prime $50 million and above category also grew by 21%, which is more than double the global average of 10% and above the Asia average of 15%.

India is estimated to add more than 2,000 individuals in this category by the end of 2022, at a growth rate of 71%, which again is above Asia’s 55% and world average of 40%.

In the same period, the superrich in the country belonging to the trophy $500 million and above category also grew by 18%, marginally above the global average of 11% and the Asian average of 16%. India is expected to have 340 individuals in this category at a growth rate of 70% by the end of 2022.

Nicholas Holt, Head of Research for Asia Pacific, Knight Frank Asia Pacific said, “2017 was a relatively strong year for growth in Asia-Pacific, which has been reflected in the growth in wealthy individuals across the region. Despite global headwinds including a rising interest rate environment, the continued rebalancing of the Chinese economy and tensions around trade, the region is set for further growth in 2018, with wealth increasingly being accumulated through new sources of growth including technology related industries.”

During the period, an impressive 97 per cent respondents from the wealthy population in India saw an increase in their wealth as compared to 72 per cent globally and 88 per cent in Asia. However, at 17 per cent, property investments was amongst the lowest contributing factors that led to increase in wealth amongst Indians, compared to 50 per cent globally and 30 per cent for Asia.

In 2017, while 95 per cent respondents claimed that India’s wealthy people increased their investments into equities, 50 per cent said that investments into property declined that year. In India, investment allocation into property at 36 per cent was lower than globally 43 per cent and Asia at 39 per cent.

According to Das, the top choices are UK, USA and UAE for those who are looking to invest outside India.