Global Luxury Property Review April 2013
Luxury property market driven by scarcity and foreign buyers Limited inventory, strong international buyer demand, and high net worth individual’s increased appreciation for world class lifestyle offerings have pushed prices for luxury homes toward historic highs, a new study shows. The research from Christie’s International Real Estate compares the world’s top property markets including London, New York, Hong Kong, Paris, San Francisco, the Cote d’Azur, Toronto, Dallas, Los Angeles, and Miami, to produce the firm’s first global indicator for luxury residential real estate. The Index ranks markets across key metrics including record sales price, prices per square foot, percentage of non-local and international purchasers, and the number of luxury listings relative to population. It shows that globally, top tier property sales achieved record prices in several cities, remaining immune to many of the economic concerns that drive the general housing market and that HNWIs are often more inclined to invest in an important global market than in another city within their home country for second or additional homes.
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It found that prestige residential real estate values will more likely follow growth trends of non consumable luxury goods such as fine art more so than the growth trends of the general housing market. It also shows that cash transactions have dominated luxury property acquisitions across many cities but recent tax law changes in many of these markets are expected to negatively impact on market activity in 2013. ‘With financial markets providing a limited return on investment, high net worth individuals are recognising the intrinsic value of investing in non-consumable assets such as prestige real estate and fine art,’ said Bonnie Stone Sellers, chief executive officer of Christie’s International Real Estate. ‘Strong momentum in the luxury property market is also being driven by scarcity of quality inventory and demand from international buyers in many of the world’s top destinations,’ she added. London topped the index for the highest home sale price at $121 million followed by New York at $88 million the Côte d’Azur recorded the highest percentage of both secondary home buyers, 95%, and international and non-local buyers, 90%. ‘Ultra high net worth individuals with significant cash on hand, such as many of our Russian clients, are not afraid to invest in Côte d’Azur real estate despite recent market volatility,’ said Niki Van Eijk of Christie’s International Real Estate affiliate Michaël Zingraf Real Estate in Cannes. ‘These multi millionaires and billionaires are still keen to purchase property in the area for leisure purposes. They do not purchase these homes in order to flip their investments, rather they may purchase a spectacular home in Cannes or Cap Ferrat to enjoy the region’s wealth of available cultural and leisure pursuits,’ explained Van Eijk. Toronto’s real estate market, which has remained buoyant in recent years of global turmoil, recorded the lowest amount of days on the market for luxury listings at 46 days. However, the report says that this trend began to reverse in the second half of 2012 and the number of days on market is expected to lengthen in 2013 as a result of the implementation of new restrictions on mortgage financing intended to cool the housing market. Part of the success of the Miami market in 2012 was fuelled by South American buyers concerned with their own local economic conditions. ‘International buyers, in particular have been purchasing Miami property as a result of uncertainty in their currencies, which have often been devalued against the US dollar,’ said Ron Shuffield of Esslinger Wooten Maxwell Realtors, the Christie’s International Real Estate affiliate in that city. Source: PropertyWire
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Billionaires property buying spree Global billionaire activity in world real estate markets has been so intense over the last seven years that it has led to a doubling of property values in this sector, says international real estate adviser Savills, in its latest World Cities Review. Although overall, aggregated world values did fall somewhat after 2007 and price movements seem relatively volatile, recovery has been significant since 2009 so billionaire markets have exceeded the growth seen in mainstream markets of the same world cities. It has been rising commodity prices and the creation of new, ultra-rich classes in China and Asia that has precipitated the highest growth in ultra-prime real estate values. Singapore and Mumbai stand out as having seen the highest growth in ultra-prime values since 2005 (at 232% and 176% respectively). Both grew from a relatively low base while the highest overall values are seen in Hong Kong. Cities in newly emerged economies have significantly outperformed those in the ‘old world’ economies of the US, Japan, Australia and Europe. Only London’s ultra prime market stands out among the ‘Old World’ cities as having shown significant growth since 2005, totalling 107%. New York’s billionaire real estate stands only 47% higher and Tokyo ultra-prime residential is only 8% more expensive (in local currency) than it was in 2005. Source: Savills
Other luxury property news: London luxury price rally to slow down, Grosvenor Grosvenor Group Ltd., the real estate company owned by the Duke of Westminster’s family trusts, said it’s looking to buy rental properties for middle-income tenants as London’s five-year luxury-home boom may be ending. Grosvenor will target rental-home purchases because the value of luxury properties may climb at a slower rate, Chief Executive Officer Mark Preston said in a telephone interview today. The London-based company may partner with pension funds in the investments, he told Bloomberg Businessweek. Source: Bloomberg
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Strong luxury home sales Q1 of 2013 for Las Vegas Kenneth Lowman of Luxury Homes of Las Vegas reported strong luxury home sales in the first quarter of 2013 for Las Vegas and Henderson, Nevada. There were a total of 54 luxury homes sold at or over $1 million in the first quarter of this year. This compares to just 33 luxury homes sold in the first quarter of 2012. Just five of the fifty-four sales were distressed or bank owned sales, just under 10% of the total. Source: SFGate.com
Dubai luxury property up 9% Real estate experts Cluttons has said average prices for high-end villas in Dubai are up by nearly 9% over the past six months. Cluttons said luxury villa prices have increased on average by 8.9 percent between Q3 2012 and Q1 2013, while mid-range villas have experienced gains of 14.9 percent over the same period. Source: ArabianBusiness.com
UK residential property prices up 1.9% Residential property prices in the UK increased by 1.9% in the 12 months to the end of February 2013, the latest data from the Office of National Statistics shows. Source: PropertyWire
More searching for overseas property location, report More than half (51%) of overseas property locations saw an increase in search activity in March 2013, according to the latest monthly report from Rightmove Overseas. With notable increases in search activity seen for Cyprus, Madeira and Turkey.
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Property Spotlight
Luxury Villa in La Moraleja, Madrid
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elegant and spacious accommodation – perfect for today’s family lifestyle and entertaining. La Moraleja is the Madrileño version of Beverly Hills, a tranquil and spacious oasis of luxury villas with private gardens. Its residents include the internationally rich and famous, film stars, impresarios, politicians and top company directors. For further information about this property, the price and more photographs of this stunning Luxury Villa in La Moraleja, Madrid visit the Butterfly Residential website here or click on one of the images. About Butterfly Residential The Global Luxury Property Review is a monthly article compiled by Butterfly Residential offering a snapshot of the sector. Butterfly Residential is a boutique, professional, high-end property company specialising in sales and rental of luxury property Marbella, London and Barbados, among others. Butterfly Residential is headed by Edward Fairless and Nicola Fairless, a brother and sister team who are the new sensation in the global luxury property sector. Address: Avd. Ricardo Soriano 72, Edf. Golden, Portal C, 2º H, 29601 Marbella, Málaga, España
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