No: 08pr726
Date: 23 September 2008
Prime International Residential Index Q2 2008
Key highlights
• The prime residential market is weakening across the world – due to the fallout from the credit crunch and declining economic conditions in western markets.
• The super-prime market is increasingly divorced from the wider market – with strong performance seen in London, New York, LA and other top-end markets.
• The top tier of global prime property is represented by Monaco, the central London and New York markets and the best French sunbelt (Cote d’Azur) and snowbelt (Courchevel) markets.
• Prime markets in the emerging world appeared sheltered in 2007, now there is a growing risk of oversupply together with potential price bubbles in Asian markets.
• Wealthy buyers from Russia are influencing pricing and demand for London and the French and Italian Alps. Their counterparts from India are increasingly influential in Europe and the US, whereas wealthy Chinese buyers remain focused on Asian markets.
Liam Bailey, head of residential research, Knight Frank, commented: “Monaco and London both vie for the top spot in the global housing market stakes. With the prime market in London taking a hit from the credit crunch fallout, London has now slipped into the second position, with prices for the best properties averaging £3,290 psf, compared with £3,760 psf in Monaco. However, these averages hide the fact that prices in both locations have broken records in recent months, with the £5,000, £6,000 and even £7,000 psf barriers surpassed by new build and refurbished properties.
“Against the backdrop of the credit crunch why has this super £10
million+ sector remained so strong? Despite the credit crunch, extraordinary
wealth creation has continued until recently across the global oil and commodity
sectors; the financial markets have taken a significant turn for the worse
and will drag down the performance of the prime markets over the next 12
months. Recent falls in energy and commodity prices also point towards a
weakening in wealth generation from these sectors in future months.
“
The dislocation of London and Monaco’s top end market has been reflected
in the only other true global super-prime market, Manhattan. Whereas prices
in the US are still falling, prices for prime Manhattan properties rose 12.3%
in the year to June, although indications are that the market is weakening
through Q3.
“Does the divergence of performance mean we are close to the peak of the super-prime market? Our view is that fundamental economic arguments point to continued support for this sector. Demand is not going to evaporate, wealth creation and accumulation in emerging economies and in specific high end service sector activities will continue. The flight to quality in terms of both location and product we have seen over recent years will remain a constant.”
Knight Frank Prime International Residential Index, Quarter 2 2008
Location Country Q2 2008 £ psf Q2 2008 Euro per 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 16,455 -9.4%
8 Hong Kong China 1,185 16,065 27.2%
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)
For further information, please contact:
Liam Bailey, Residential Research, Knight Frank, +44 (0)20 7861 5133, +44 (0)7919 303 148, liam.bailey@knightfrank.com
Niki Riley, Press Office, Knight Frank, +44 (0)20 7861 5037, +44 (0)7769
695088.
niki.riley@knightfrank.com
Ends
Notes to Editors
Knight Frank LLP is the leading independent global property consultancy.
Headquartered in London, Knight Frank and its New York-based global partner,
Newmark Knight Frank, operate from 196 offices, in 38 countries, across
six continents. More than 6,770 professionals handle in excess of US$700
billion (almost £355 billion) worth of commercial, agricultural and
residential real estate annually, advising clients ranging from individual
owners and buyers to major developers, investors and corporate tenants.
For further information about the Company, please visit www.knightfrank.com.
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