Prices of residential property in Mumbai expected to fall by 8-9%: Knight Frank

New Delhi: Prices of residential property in India’s financial capital Mumbai is expected to fall by 8-9 percent by the end of 2021 as the spread of corona virus takes its toll on the residential real estate market.

In an analysis of the top global cities by property consultant Knight Frank reveals that Bengaluru’s prime residential market has done better than that of Mumbai and Delhi. Bengaluru ranks 27th globally with 1.4 percent change in prices for the period of Q1 of 2019 to Q1 of 2020.

Delhi has ranked 32nd globally with about 0.4 percent change in prices in the same period. Mumbai has ranked 33rd globally with 0.1 percent change in prices for the same period.

The unsold stock of completed homes has exerted pressure which has been coupled with difficult economic environment. The 6-year low GDP growth rate in the Q3 of financial year 2019-20 strained the prime housing market in all the cities. The corona virus outbreak started to have an impact by mid-March this year has further put pressure in this segment of real estate. 

“The impact of COVID- 19 is far reaching for most global markets which is reflected in the outlook for the prime residential segments. India’s key markets will also be faced with the uncertainty mostly due to a significant erosion of confidence amongst buyers across spectrum,” said Shishir Baijal, Chairman and Managing Director at Knight Frank India.

Going forward, buyers will prioritise second home closer to their homes that can be easily reached by road or even rail as the air travel is becoming difficult due to corona virus outbreak. The interest rates are likely to remain at historically low levels in most of the advanced countries, some of the high net worth individual may look at taking advantage of the situation by refinancing their loans. 

There has been a heavy impact on the holiday rental market. Therefore, many landlords are transitioning to the long term rental market. This is going to suit city destinations where there is local demand instead of more remote second home markets that are defendant of on overseas tourism.