Mumbai has overtaken NCR and Bangalore to witness maximum appreciation in prime residential development land as per Knight Frank’s Prime Asia Development Land Index.
This index derives the price of prime residential (apartment or condominium) and commercial (office) development land in 13 major cities across Asia that include NCR, Bangalore and Mumbai in India and showed Southeast Asian cities experiencing surging price growth.
In Mumbai, change in development norms coupled with increase in prime residential prices resulted in an appreciation of 35.2 per cent in prime residential development land in the last two years.
“Notwithstanding the muted growth in end product price during last year, land suitable for prime residential development witnessed unabated interest,” said the report.
The report also highlighted that weak economic scenario that impacted office space absorption combined with large quantum of office supply led to a decline in the prime office development land index by 13.1 per cent during the last two years.
“In 2014, an overbearing office supply pipeline coupled with a marginal improvement in demand will keep rentals in check. As a result, demand for prime office land will remain sluggish,” the report added.
Dr Samantak Das, Chief Economist and Director – Research, Knight Frank India, said: “The results of Knight Frank’s inaugural Prime Asia Development Land Index indicate an increase in land prices in all three Indian cities. While Mumbai witnessed maximum appreciation in prime residential development land compared to National Capital Region and Bangalore, it emerged as the worst performer in the prime office development land.”
“Low transaction volumes coupled with large quantum of office supply led to a decline in the prime office development land index by 13.1 per cent in Mumbai during the last two years,” he added.
Fali Poncha, Director – Land, Mumbai added: "Population growth and economic prosperity have resulted in a dramatic increase in demand for housing in Mumbai, particularly in the last 10-15 years. Limited availability of land, poor quality infrastructure and regulatory constraints, have severely restricted the creation of new housing stock, resulting in an ever widening demand supply gap and consequent increase in built property prices. This, in turn, has led to a very significant rise in land prices, which trend is likely to continue for the foreseeable future."