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Reuters/Rupak De Chowdhuri
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EXPENSIVE

Home prices in this Indian town are surging faster than in London or Hong Kong

By Suneera Tandon

An Indian town is giving the likes of London, Tokyo, and San Francisco a run for their money when it comes to home-price appreciation.

In the last one year, Surat, a coastal city in the western state of Gujarat, saw the highest rise in home prices among 150 cities tracked across the world by Knight Frank. Residential property prices there rose 22% between January and March 2018 compared to a year ago, a recent report (pdf) by the real estate consulting firm showed.

The spike “was due to an inordinately low base in Q1 2017, caused by the unprecedented demonetisation of high-value currency in the country,” the report said. “A year ago we saw 12 cities exceed 20% growth per annum. This quarter only one city falls into this category; the Indian city of Surat.”

Overall, the global residential property price index rose by 4% between January and March 2018, Knight Frank said. This was down from 6.4% a year ago, and the weakest growth since 2015.

Home to six million people, Surat is amongst India’s wealthiest cities and the world’s largest diamond polishing and cutting hub.

Gujarat’s capital Ahmedabad, too, figured in the top-10 list this year. Here are the cities with the highest year-on-year rise in residential property prices (January-March 2018):

Surat, meanwhile, is an outlier in the stressed Indian real estate market.

Caught between tepid demand and regulatory upheavals, the sector has been in a slump for years now. In 2017, for instance, sales in five of the top seven Indian cities dipped to an all-time low of 4.8% in the third quarter, forcing developers to sell houses at a discount.