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What do Mumbai and London have in Common?...Not much when it comes to Real Estate

These are turbulent times for property markets, but interest rates are still a steady(ish) bellwether for where they’re headed next: the Reserve Bank of India hiked the subcontinent’s key repo rate by 1.4% in August, and we all know, all too well, what’s been happening in the UK: five year fixed term rates have soared from 2% to 6.19% in the space of three short weeks ( Inflation remains a persistent variable, too (9.9% in the UK, 7% in India), with its chill hand exercising a consistent grip on forward pricing, as well as distorting near-term interest rates into the bargain. So it’s all beginning to feel disarmingly like something of a vicious spiral…but wait, stop and draw breath a moment: wherever the UK is headed (and we’ll have to wait for the next slapstick instalment of the Truss and Kwarteng show to find out)…wherever the UK goes, the underlying trend for real estate on the subcontinent is still surprisingly strong.
According to Knight Frank India’s latest sectoral report (, August was the best month for Indian real estate in more than a decade: new registrations rose by 20% year on year, and larger, upscale apartments and houses are making up an increasing share of overall sales. None of that suggests consumer demand is likely to be tailing off anytime soon, and ironically, it may even be driven in significant part by a progressive upwards pressure on interest rates (with the promise of more to come): it’s because borrowing is becoming more expensive that purchasers are snapping up bargains while they can.
As Vivek Rathi, Director of Research at Knight Frank India, put it (with obvious justification): “ we are seeing an urgency among buyers, which has led to a rise in demand”…Quite so: pithy, prescient, and also undeniably true.
But that isn’t the only reason why India is experiencing resurgent property markets, while their UK counterpart is currently looking down the barrel of a real-term 20% decline in prices over the course of next year. For the last decade or so, and unlike the UK, the subcontinent has witnessed a generational change towards increased urbanisation, fuelled by an ever richer (and increasingly younger) middle class, with more money to spend than ever before: more aspirational than ever, and minded to buy in root and branch to the dream of home ownership. COVID played its part in that, too: how could it do otherwise, with millions locked down for the best part of two years, and little more to do than count the four walls around them, while busily turning their home into an office… they’re increasingly deciding to hitch their dreams to the brickwork. 
All of which might help explain the increased number of larger properties that are being bought at the moment on the subcontinent: in Mumbai, for instance, most of the current property inventory is in the range of five hundred to a thousand square feet. 
Two in three residents of the Mumbai Metropolitan Region also now believe house prices will rise in the future, and they’re aiming to buy within the next few months to make the most of the bargains: bearing in mind the underlying market trends…who can possibly blame them? It’s not like that in London.


Executive Overview

It really does seem to be a tale of two markets: interest rates are rising globally and likely to rise further, but the buoyant and increasingly aspirational nature of the subcontinent’s demographic is sustaining Indian real estate. That’s not something we’re seeing at the moment in the UK.


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Suchit Punnose

Suchit Punnose / About Author

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