By Knight Frank
The Wealth Report 2020 reveals the results of its Prime International Residential Index (PIRI 100). The index, which tracks the movement of luxury residential prices in 100 city and second home markets globally for the 12-months to the end of December 2019 reveals:
- European & Asian cities dominate the top 10 best performing locations. In Europe, Frankfurt (10.3%), Lisbon (9.6%), Athens (7.0%) and Berlin (6.5%). In Asia, Seoul (8.9%), Taipei (7.6%), Manila (6.5%) and Guangzhou (6.3%)
Of the major GCC cities, Riyadh was the only city where prime increased, with average prime prices increasing by 0.2% in 2019
- Prime prices fell marginally in Dubai in 2019 by 0.7%, down from 7.0% a year earlier, Abu Dhabi saw prime prices fall by 5.5% over the same period
- Monaco remains the world’s most expensive market with US$1m buying 16 square metres of prime property
- US$1m buys 155 square metres of prime property in Dubai, compared 30 square metres in London and 32 square metres in New York
- The 100 locations covered by PIRI recorded average price rises of almost 2% – up from 1.3% in 2018
- Gone are the days of 30% annual growth in China’s metropolises, Seoul and Taipei are now the region’s frontrunners with annual growth of almost 9% and 8% respectively
Of the major GCC cities, Riyadh was the only city where prime prices increased, with average prime prices increasing by 0.2% in 2019. While in Dubai, prime prices fell marginally by 0.7% in 2019, Abu Dhabi saw a fall of 5.5% over the same period.
Dubai’s hosting of Expo 2020, the first to be held in the GCC region, along with an overhaul of investment visas – as well as greater powers for Dubai’s Real Estate and Regulation Authority (RERA), which empowers it to oversee the strategy for all future real estate projects – are together adding some optimism to the market. The annual rate of decline slowed to -0.7% in 2019.
Taimur Khan, Associate Partner, Strategic Consultancy and Research at Knight Frank Middle East, commented: “Despite prime prices in Dubai falling marginally in 2019, in general we have seen an uptick in market activity in 2019, as the some positive sentiment returns in the prime segment of the market. With Expo 2020 approaching, which is forecasted to create 900,000 full-time jobs and is estimated that the event will contribute an additional 1.5% to the UAE’s GDP. This growth in the UAE’s economy will undoubtedly have a direct impact on real estate and investments into the sector.”
Mounting challenges, both economic, political and climatic, are curtailing prime price growth for our African cities. Prime sales in Cape Town held up but prices dipped (-1.5%) as longstanding vendors proved more flexible on price.
Kate Everett-Allen, Head of International Residential Research at Knight Frank, said: “The results of our Prime International Residential Index reflect this slowdown. While growth ranged from double-digit hikes in some markets to significant falls in others, we saw a shift in the trend of moderating growth that has prevailed since 2013. In 2019, the 100 locations covered by PIRI recorded average price rises of almost 2% – up from 1.3% in 2018, but still some way off the 2.8% recorded in 2013.”
“Monaco continues to be the most expensive city in which to buy luxury residential property. US$1m buys just 16.4 square metres of accommodation here – the equivalent of a bedroom. This is followed by Hong Kong and London. New York slipped to fourth place in 2019 although the gap between London and New York is small with currency shifts also proving influential.”
Hong Kong prime price increases ended 2019 at 2.9%, with a mortgage cap reduction and three interest rate reductions mitigating some of the impact of the political volatility. Singapore (1.2%) is firmly back in the spotlight – the higher rates of stamp duty for overseas buyers are no longer considered draconian, rather a trade-off for stable politics and a secure currency in a city-state that applies no capital gains tax or estate duties.
Sydney leads the five Australian markets tracked by PIRI with price growth of 3.7% – constrained supply and cheaper finance are underpinning prices.
The square metres of luxury property US$1m will buy around the world:
Data as at December 2019