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Billionaire buyers push values of ultra-prime homes higher

Tuesday 19th March 2013

Despite much economic uncertainty around the world, 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 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.

£ per sq ft/sq m billionaire property

 

City

£ per sq ft

£ per sq m

Average property size (sq ft)

Value change %

2012 total

July-Dec 2012

2005-2012

Hong Kong

7,200

77,500

5,200

12.5

0.0

113.3

Tokyo

5,000

53,900

16,000

-0.2

-0.1

7.9

London

3,500

37,600

7,900

8.7

1.8

107

Paris

2,900

31,300

10,800

-7.6

-2.7

59.2

Moscow

2,800

30,600

4,600

8.2

1.0

138.9

New York

2,700

28,800

6,500

0.0

0.0

47.4

Shanghai

1,400

14,600

5,400

-2.0

1.4

33.6

Singapore

1,200

12,900

12,300

4.8

2.2

231.8

Mumbai

640

6,900

6,800

8.6

8.6

175.8

Sydney

580

6,200

19,400

0.0

0.0

66.4

Source: Savills World Research

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.

2012 saw some significant curbs imposed on billionaire buyers in some world cities. This has resulted in slowdowns rather than falls in most of them. Singapore’s ultra prime growth slowed to about 5% in the year, Hong Kong’s stalled in the second half and London slowed significantly in the second half. Only in France did high-profile threatened tax measures seem to actively curb activity and suppress prices. Our ultra prime index in Paris is down, nearly -8% on the year, while billionaire properties in the Riviera ended down -10%.

Yolande Barnes, head of world research at Savills, said: “Billionaire activity has been concentrated on high-end urban centres rather than leisure properties in the surrounding countryside or regional sunbelts. This reflects a global preference for urban locations as these billionaires need to be located in cities where they can do business. “Leisure property has also been a lower priority for the newly-wealthy, however we expect leisure destinations to take off when Ultra High Net Worth Individuals are fully invested in cities. Consequently, the index for billionaire leisure homes has not yet quite recovered to its former 2007 peak and only stands 34% higher than it did in June 2005.”

Leisure resorts and country property purchases tend to lag behind city values however they have the most potential for growth. Leisure properties in the most fashionable billionaire boltholes, such as Cap Ferrat, Alibag and Phuket, are likely to see the highest growth.

Leisure destination index

City of Origin

Leisure Destinations

Cost rank

2012

July-Dec 2012

Paris

Cap Ferrat / St Tropez

1

-10.0%

0.0%

Moscow

Barviha, Razdory / Rezidentcii Benilyuks

2

3.0%

1.2%

London

Oxfordshire / Dartmoor

3

1.1%

0.4%

Tokyo

Hakone / Niseko

4

-2.1%

-1.5%

New York

The Hamptons, Long Island

5

0.8%

0.0%

Sydney

Palm Beach / The NSW Highlands

6

-2.0%

0.4%

Shanghai

Phnom Penh, Cambodia / Phuket, Thailand

7

-0.2%

1.5%

Hong Kong

Phuket & Krabi, Thailand

8

0.8%

0.0%

Mumbai

Alibag

9

2.9%

2.9%

Singapore

Bukit, Bali / Penang, Malaysia

10

-3.6%

0.4%

Source: Savills World Research

              

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