The residential market in Mumbai has shown a negative growth of -9.1 percent during March 2011-2012, according to the latest Knight Frank Prime Global Cities Index, which compares the performance of prime sales markets across key global cities.
Prime property prices have risen in the December-March quarter 2012 in four Asian markets barring Mumbai, Shangahi and Beijing and Sydney. Even though Mumbai's prime property market remained stagnant in the September 2011-March 2012 period, it crashed by 9.1 percent in the last one year ending March 2012.
Moreover, demand for the world's priciest houses is likely to cool this year after two years of strong growth, as concerns over Europe's debt crisis, the health of the global economy and governments price cooling measures in Asia dissuade buyers, the research showed.
The average price of luxury homes across 23 key world cities fell for the first time since 2009 by 0.4 percent in the first quarter of 2012, reflecting slowing demand. This was also sharply down from the same period in 2011, during which global luxury house prices had risen 6.6 percent, Knight Frank said.
"The first three months of 2012 brought with it little new momentum. The Eurozone's debt debacle remained at the forefront of the global economic agenda, several critical elections were on the horizon (Russia, France, Greece) and Asia's highly-effective cooling measures showed no sign of being relaxed. Against this backdrop some luxury buyers took to the sidelines to observe their market's trajectory, said Kate Everett-Allen, International Residential Research at Knight Frank.
Despite the overall index's sluggish performance, four prime markets achieved double-digit growth over a 12-month period; Nairobi, Jakarta, Miami and London.
Singapore and London showed particular resillience, seeing strong growth despite the introduction of new stamp duties in the first quarter.
Overall, the index remained subdued in 2012 fluctuating between marginal price falls and rises. Knight Frank said it seems unlikely the globe is on the cusp of a new deflationary cycle in luxury houses.
Below are the key finding of the Knight Frank Prime Global Cities Index report:
* The index recorded its first quarterly fall since 2009 with prices falling on average by 0.4% in Q1 2012
* Overall, the index rose 1.4% in the 12 months to March 2012
* Mumbai's residential market shows a negative growth of -9.1% from March 2011 to March 2012
* Prime markets in North America performed strongly, prices increased by 7.7% on average in the last 12 months
* Nairobi (up 24%) was the strongest performer in the last 12 months
* Prices in Dubai (up 4%) rose the most in the last 3 months