Published: 2nd October 2008
Super rich drive boom in top-end property prices
Research from international estate agency
Knight Frank reveals that the £10 million+ global property sector has become increasingly divorced from the wider property market. Although prices have been falling in most western markets, property prices in havens for the super-rich have remained immune to falling stock markets and the credit crunch.
Of the 20 super-prime locations detailed in the Knight Frank study, only two, Courchevel (Alps) and Dublin experienced year-on-year declines. The biggest yearly increase was in Dubai (52.6%), closely followed by Beijing (43.2%), although Liam Bailey, Head of Residential Research at Knight Frank, warns there is a danger of over-supply in many Asian markets. “There’s been a great deal of construction in places like Hong Kong and Dubai and inventories can take four years to adjust [to changes in demand]. It’s a risk,” he says.
Oil and commodity money
The most expensive real estate in the world continues to be in Monaco, The Alps, Cote d’Azur and Manhattan. Over the past 12 months, the super-prime markets have been driven by rising oil and commodity prices with wealthy Russian buyers clearly influencing prices in London, the South of France and the Italian Alps, according to Bailey. “New York tends to be influenced more by domestic buyers as it’s a much bigger market but oil and commodity wealth from South America also has an influence.”
Although recent falls in oil and commodity prices will dampen these markets over the coming 12 months, demand is not going to evaporate. “The flight to quality in terms of both location and product we have seen over recent years will remain a constant,” says Bailey.
Knight Frank Prime International Residential Index – Q2 2008
Position
|
Location
|
Country
|
Q2 2008 £/sq.ft.
|
Q2 2008 €/sq.m.
|
Q2 2008 annual % change
|
| 1 |
Monaco |
Monaco |
3,762 |
51,000 |
30.0% |
| 2 |
London
|
UK |
3,291
|
44,620 |
1.8% |
| 3 |
Cap Ferrat (prime Cote d'Azur) |
France |
3,121 |
42,320
|
2.0% |
| 4 |
Courchevel (prime Alps) |
France |
2,530
|
34,300
|
-2.0% |
| 5 |
New York
|
USA
|
2,486
|
33,705 |
12.3% |
| 6 |
Moscow |
Russia
|
1,256
|
17,031
|
18.4% |
| 7 |
Tokyo
|
Japan |
1,214
|
17,031 |
18.4% |
| 8 |
Hong Kong |
China |
1,185
|
16,065
|
-9.4% |
| 9 |
Sydney
|
Australia |
1,090
|
14,782
|
4.0% |
| 10 |
Paris
|
France
|
1,026
|
13,910
|
0.0% |
| 11 |
Singapore |
Singapore |
888 |
12,035
|
7.8% |
| 12 |
Barbados |
Barbados |
633
|
8,585 |
0.0% |
| 13 |
Florence |
Italy |
632
|
8,571
|
-8.0% |
| 14 |
Bermuda |
Bermuda |
533
|
7,225
|
0.0% |
| 15 |
Dubai
|
United Arab Emirates |
465 |
6,300 |
52.6% |
| 16 |
Dublin |
Ireland |
418
|
5,670
|
-16.7% |
| 17 |
Sao Paulo
|
Brazil
|
249 |
3,381 |
0.0% |
18
|
Brussels |
Belgium |
223 |
3,021
|
5.0% |
| 19 |
Beijing
|
China |
205 |
2,784
|
43.1% |
| 20 |
Shanghai
|
China |
194 |
2,631 |
23.1% |
Source: Knight Frank: September 2008. Includes properties valued at £5 million and above.