30% Rise in Mumbai Home Sales

Mumbai home prices have jumped about 30 percent over the past six months, leading to a drop in home sales in India’s financial capital as higher prices deter buyers, Knight Frank LLP said. “Residential property prices have risen too much too fast,” Pranay Vakil, chairman of Knight Frank (India) Pvt. said in an interview in Mumbai. “We are seeing resistance at higher prices and as a result volumes have declined.” The average sale price of existing homes between 1,000 square feet (93 square meters) and 2,000 square feet has climbed 11 percent to 20,000 ($450) a square foot in North Mumbai in the fourth quarter from the three months to Sept. 30, according to data from property consultant Cushman & Wakefield. That was the highest in at least eight quarters.

Wealthy individuals globally put off making purchases in 2009 because of concern over the strength of the economy, according to a survey by the London-based broker and Citi Private Bank. Half of the respondents in the survey published last month said they expected better returns from residential real estate this year than from other types of property. Real estate accounted for about a third of the assets owned by Citi’s clients, more than stocks and other investments. Property is expected to be the third-best performing asset class in 2010, after stocks and hedge funds, the worldwide survey showed.

“We have seen a huge spurt in demand for homes from non- resident Indians,” Vakil says. Vakil, who sees a direct link between the stock market and property prices, says he expects prices to remain at these levels unless stocks climb further. India’s benchmark Bombay Stock Exchange Sensitive Index has risen 2 percent this year, after an 81 percent advance last year that made it Asia’s third-best performing market.