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Singapore's luxury market witnesses maximum price growth Mumbai prices remain stable  |  September 14, 2018

Vandana Ramnani

Singapore witnessed resurgent price growth in the premium market segment due to rising foreign demand and high land bids by developers and leads the global house price rankings (+11.5%) followed by Tokyo at 9.4 percent. Prices of prime properties in Mumbai more or less remained stable at 0.6 percent, according to the Knight Frank Global Wealth report.


As per the Prime International Residential Index (PIRI) that analyses the top 20 top luxury residential markets across the world, the average prime prices across cities rose by 6 percent in the year to December 2017 by June 2018 this figure had dipped to 4.2 percent.


All cities in the below 1 percent range in the half-year update of Knight Frank’s Wealth Report, indicate that prices of prime properties have remained stable and offer a good entry point for billionaires, points out Arvind Nandan, executive director Research at Knight Frank (India) Pvt Ltd.


“While the buying strength of demi-billionaires in this segment is rising, prices of prime property in Mumbai more or less remained stable which means that there could be more opportunities for buyers in this particular segment,” he said.


As per PIRI ratings, European cities continue to strengthen &ndash Madrid (10.3%), Berlin (8.5%) and Paris (6%). Domestic buyers in Paris are back, buoyed by an improved economy and cheap finance. Los Angeles leads the rankings amongst US cities (7.8%). US cities registered positive growth in the year to June, reflecting the general health of the economy.


GST and RERA to improve transparency in the Indian premium market


“Investors may rue the rise in regulations which, in many cases add to their bottom line on the other hand, new regulations have heightened market transparency enabling some purchasers to move into emerging markets with greater confidence,” said Kate Everett-Allen, partner, international residential research at Knight Frank.


GST was rolled out in India in 2017. The closing of price gaps have created greater uniformity and certainty in the Indian market.


The uniform tax regime has evened out the vagaries that were based primarily on the variation in input tax.


“We have had a series of regulations - GST, RERA etc in India. These have brought in a structural change in the real estate market. We will have a scenario wherein the buyers in the prime segment will increase and as the rough edges in the tax regime are smoothened, uncertainties in the market will get reduced. This is expected to improve transparency in the market and improve the standing of our premium market in the prime international residential index by a few notches going forward. But these changes will take place  progressively,” he said.


Demi-billionaires in Asia to overtake those in North America


The report also states that the number of demi-billionaires, those with $500 million or more in net assets, in Asia will overtake those in North America for the first time in the next five years. Wealth data specialists Wealth-X predict that there will be almost 3,000 people based in Asia who have more than US$500 million in assets by 2022.


It cites strong global economic growth, as well as rising asset prices as key drivers behind the growth in the world’s demi-billionaire population. By 2022, Wealth-X anticipates that there will be 9,570 demi-billionaires worldwide, up from 6,900 at the end of 2017.


Despite Asia’s growth, the US will remain the country with the biggest overall population of demi-billionaires, expected to rise from 1,830 to nearly 2,500 over the next five years. In China, the number will grow from 490 to 990, Wealth-X said.


Demand for logistics space on the rise in South-East Asia


The wealth report also predicts the rise of e-commerce and shifting trade dynamics in South-East Asia. This will drive an increase in the value of logistics assets in the region.


According to Knight Frank’s half-year Wealth Report, logistics has become one of the most coveted real estate asset classes, attracting $126 billion of investment globally in 2017. The growth of the sector has been driven by the rise of ecommerce, with increased demand for logistics space from retailers driving rental and capital value growth.


Rising demand for accommodation from parents sending their children to private schools in London


Another trend is that of international demand for accommodation from parents looking to place their children at private schools in the UK capital. This has led to £2 billion being invested in London’s prime housing market over the past 12 months.


The survey shows that the markets sending the largest number of children to school in London are Hong Kong, Mainland China and Russia. The three predominant motivations for parents are the quality of education (87% of all respondents), the prestige of the school name &ndash including perceived future employment prospects (67%) and improving their children’s chances of securing a place at a top UK university (62%).