Wealth Report: Mumbai ranks 16th among top 20 costliest cities in the world

Mumbai now ranks 16th among the top 20 costliest cities in the world. $1 million can get you little less than 1,000 sq ft in the posh localities of the country’s commercial capital. With that amount, one can buy 237 sq ft space in Hong Kong, which ranks second in the tally, shows Knight Frank’s annual wealth report.

A year ago, Mumbai property market ranked 15th on this list with $1 million fetching 1,065 sq ft space.The rise in Indian financial capital’s ranking on this count is supported by the rapid wealth creation in the country. India is expected to be the third largest contributor in Asia with respect to the wealthy population after China and Japan by 2022.

The index is drawn from four major indicators such as wealth, investments, lifestyle and future. Mumbai and Delhi would be among the top 10 markets to witness the highest addition in households earning more than $250,000 annually between 2017 and 2022.

In terms of wealth alone wherein the index measures 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 with Delhi at 22nd and Bengaluru at 26th positions respectively.

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

“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 second home) in India compared to 43% globally,” said Samantak Das, Chief Economist & National Director - Research, Knight Frank India.

The nation’s affluent class in the super prime $50 million and above category also grew by 21% between 2016 and 2017, more than double the global average of 10% and above the Asia average of 15%. Between 2017 and 2022 India is expected to add more than 2,000 individuals in this category, at a growth rate of 71% again well above Asia’s 55% and the world average of 40%.
The super rich in the country belonging to the $500 million and above category also grew by 18% between 2016 and 2017 marginally above the global average of 11% and the Asian average of 16%. By the end of 2022, India is projected to have 340 individuals in this category at a growth rate of 70%. 

“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,” said Nicholas Holt, Head of Research for Asia Pacific, Knight Frank Asia Pacific.

Property investments were amongst the lowest at 17% contributing factors that led to increase in wealth amongst Indians, compared to 30% for Asia and 50% globally. While 95% respondents said that India’s wealthy people increased their investments into equities, 50% said that investments into property dwindled in 2017. The investment allocation into the property in India at 36% was lower than Asia at 39% and globally 43%.

According to Das, for those looking to invest outside India, the top choices are the UK, USA, and UAE. Amongst those willing to commit to a property, a heightened level of interest is seen in the asset class of commercial real estate particularly office and logistics, warehousing on the back of a stream of policy interventions.

Majority of the respondents said that investments in gold at 69% and cryptocurrencies at 71% were unchanged in 2017.