Mumbai: Mumbai’s recent jump from 92rd rank to 37th rank in Knight Frank’s Prime International Residential Index (PIRI), which surveyed luxury price growth in top 100 world cities, was no surprise for William Beardmore-Gray, senior partner and group chair, Knight Frank LLP, who visited the city briefly last week.
“As you drive up from the Mumbai airport into the city, it is extraordinary to see in Mumbai the amount of money being invested in infrastructure, the construction work that is going on. There is a huge amount of activity. It does feel really that things are moving. The rankings are a reflection of that,” said Beardmore-Gray, who last visited Mumbai in 2016 and briefly before the pandemic hit in 2019.
Prior to becoming the group chairman, Beardmore-Gray ran Knight Frank’s London Commercial business and was head of Global Occupier Services & Commercial Agency.
According to the Wealth Report, Mumbai witnessed a 6.40% price change in its luxury inventory prices in 2022 compared to 3% in Bengaluru and 1.20% in Delhi, and Mumbai’s prices are projected to grow a further 3% in 2023.
Asked how the high inflation and high interest rate regime seen around the world would impact Indian real estate in 2023, Beardmore-Gray said, “I think the mood has changed significantly from Q4 where there was real uncertainty in markets, particularly capital markets, driven by rising inflation and high interest rates. I think much of that was more to do with the fear of where the interest rates might go.
“If not an exact picture of what’s going to happen this year, but we have got a clearer picture and my colleagues in the Indian office market say it has held up really well in Q1. I have been lucky enough to come to India a few times over last 10 years and there seems to be a mood of optimism,” he said.
“That’s not to say that 2023 is going to be straight forward. I think there are challenges ahead and the Silicon Valley Bank situation is an example of those types of challenges,” said Beardmore-Gray, adding, “I think it is a question of whether India and Indian economy is in a position to meet the challenges and the headwinds. I would say yes, it is. It would feel that way to me.”
The senior executive said the Wealth Report released by Knight Frank indicated positive signs for 2023. “In the wealth report we released recently, it shows that a third of those surveyed said they are going to invest in real estate – in office as well as residential. In our active capital, we believe in 2023, we will see the highest level of cross-border investment by private capital since 2019,” he said.
The Wealth Report data showed that Commercial Real Estate or Offices are expected to see 43% of the cross-border investment of private capital followed by 19% in residential and industrial, followed by 12% in retail and 7% in hotels.
Beardmore-Gray underlined how quality ESG-compliant offices will be great demand in 2023.
“Developers are now trying to provide good quality office stock and redevelop or upgrade the low quality of a stock which is now lying vacant. In the main gateway cities around the world, the developers are trying to provide ESG compliant commercial real estate and many of the major corporates are enquiring about sustainability credentials.
“Thus, the office market is expected to perform well if one is designing the commercial buildings taking the ESG factor into consideration. For example, in London, the rents of non-complaint buildings are going down and the rents and demand for best in class and ESG and Sustainability complaint buildings are going up.”
He said in the context of global markets, there is a huge opportunity for growth in Indian real estate. He said with China opening up, there is major movement of people across the region which is propelling good demand in office sectors which in turn will propel the demand for industrial and logistics segment.
“The effects of this are already showing as there has been a re-pricing of the interest rate in various other economies of the world, but this shift is not going to affect the core demand in these real estate classes. With all these trends, Indian real estate will certainly benefit,” he said.
Beardmore-Gray added, “The key advantages the Indian real estate market has over other international markets is its extraordinary pool of skilled human capital, which in turn immensely helps in the growth of the economy.”