Moscow, Miami and Dubai tipped for strongest prime property growth in 2013
|Wednesday, 19 December 2012|
Prime residential property prices in 14 cities worldwide are forecast to rise by 2.5% on average in 2013, according to the latest global real estate report from Knight Frank.
Moscow, Miami and Dubai are tipped as being the strongest performers as government imposes regulations slow price growth in Asia.
Knight Frank warns that a sharp slowdown in the global economy is the highest risk for the world’s prime residential markets closely followed by government cooling measures.
However, the current economic uncertainty is also considered a key driver of demand in prime cities as High Net Worth Individuals seek the shelter of ‘safe-haven’ investments.
Supply, or the lack of it, will be a key determinant of price performance in cities such as New York, Moscow and Miami in 2013. And although the price growth in Asia in 2013 is expected to slow, the west/east shift in the economic balance of power suggests more promising prospects in the medium term.
‘Since Lehman Brother’s collapse the world’s luxury markets have come full circle. The global downturn meant luxury prices tumbled as market confidence ebbed away but within 12 months key markets such as London, Hong Kong and Shanghai were rallying once more recording prime quarterly price growth of 5.5%, 5.6% and 9.8% respectively,’ said Kate Everett-Allen, head of Knight Frank’s international research team.
‘Prime property has done more than just weather the economic storm and outperform its mainstream counterparts, it has prospered as a direct result of the uncertain economic climate. The protracted Eurozone debt debacle, the geopolitical tensions surrounding the Arab Spring and the absence of alternative strong performing asset classes have heightened its appeal,’ she explained.
Wealthy buyers from Brazil, Argentina and Venezuela have been buying in Miami and those from India and Iran are investing in Dubai where a limited supply of luxury houses is pushing prices up.
‘In 2013 we expect a continuation of the same trends but currency movements will have an increasing bearing on the flow of wealth from city to city. Prime prices in New York have slipped 2.6% since 2008 but taking currency movements into account this translates into a 17.6% discount for Chinese buyers,’ said Everett-Allen.
She believes that the search for unique trophy homes will gather pace in 2013 due in part to the increasingly high standard of new projects. ‘Tall towers in the main gateway cities are already capturing the attention of an expanding number of HNWIs and we expect this trend to intensify. In the coming year the world’s wealthy will continue to micro manage their property portfolios weighing up lifestyle gains against tax benefits and currency movements but central to most decisions will be price performance, both historic and forecast,’ she explained.
Moscow is expected to record the strongest price growth of all 14 cities at 10% due to tight prime supply and the expected release of a number of super prime projects. Prices in Dubai in the luxury villa market are expected to rise by between 5% and 10% in 2013. The volume of enquiries from professionals relocating from the UK and Asia is rising while the supply of high quality family homes is largely static.
Knight Frank expects prices to fall in only three cities, Paris, Geneva and Shanghai, but in each case by less than 5%. ‘In Paris, the market has been sluggish in the second half of 2012 but we expect greater clarity to emerge in 2013 once President Hollande’s austerity measures have bedded in. New development is still limited in markets such as Paris which may help sales absorptions in spite of political dampening measures,’ she said.
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