Wealthy overseas London home owners also looking for luxury holiday homes

Wealthy property buyers who see London as a safe haven for their money are also increasingly looking at other top destinations to buy second and even third homes, it is claimed.

Home owners in prime central London who have originated from emerging economies in Eastern Europe, the Middle East and Asia in particular, are also active in the high end holiday home market, according to international agents Beauchamp Estates.

The firm’s latest International Market Insight report says that prime property investments in the most desirable corners of the globe help to safeguard liquid assets and hedge against uncertainty and through letting their properties, owners are also able to cover costs and generate additional income.

‘High net worth individuals with properties in London often have a portfolio of prime properties on other prime locations across the world,’ said Gary Hersham, Beauchamp Estates director.

The report points out that trends in buying and renting holiday homes are closely linked to the expanding tourism industry. Globally, 935 million tourist arrivals were counted in 2011 compared to 682 million in 2000, an increase of 44%. The United Nation’s World Tourism Organisation (UNWTO) forecasts the number will have reached one billion by the end of 2012.

Globally, the number of billionaires has more than tripled over the last decade, with 322 in 2000/2001 compared to 1,208 in 2010/11. While North America and China are home to most billionaires, the fastest growth in the population of the world’s super wealthy has been in eastern European and CIS (Commonwealth of Independent States) countries.

According to Beauchamp Estates’ transaction data, highly mobile, wealthy individuals with properties in London often have a portfolio of prime properties in other key locations across the world, including southern France, Italy and the Greek islands.

There are more than 71,000 foreign owned second homes along the French Riviera between St Tropez and Cap Martin (excluding Monaco). These include world renowned hotspots like Cannes, Cap d’Antibes and St Jean Cap Ferrat.

International demand and a strong image as a high end destination led to a 15% increase in second homes in the French Riviera between 2003 and 2009, according to the regional tourism committee (CRT).

The luxury second home buyer market is currently dominated by Russian speaking buyers, as well as those from the UK, France, Middle East and Scandinavia.

Demand from across the world for top end properties keeps prices in the Provence-Alpes-Côte d’Azur (PACA) region stable and elevated. Prices in PACA are on average 82% more

expensive than the national average (excluding Paris) and experienced some of the highest increases in the country.
Between the first quarter of 2000 and 2007, property prices in PACA rose by 144% compared to 111% across the country as a whole, according to the French statistical institute INSEE. In this time, the price of houses rose by 129% while apartment values have risen at a faster rate of 155%.

As buyers and vendors awaited the outcome of the French Presidential Election, to invest again with a better strategy, prices declined slightly at the beginning of 2012, falling 3% between the third quarter of 2011 and the first quarter of 2012.
 
‘Today however, we see the Côte d’Azur market continue to flourish. In Monaco, fiscal advantages and the secure environment attract buyers from all over the world and prices are among the highest,’ says the firm’s report.

‘As one of the top destinations in the south of France, Cannes, with its high end services and its prestigious lifestyle, appeals to international high net worth clientele, leading the luxury real estate market,’ it adds.

Tuscany is the third most visited region in Italy with almost six million international visitors annually and also popular with wealthy buyers. Holiday home prices on Tuscany’s coast, while not as bullish as Portofino, Porto Cervo or Capri, are among the highest in the country. Similarly, as one of Italy’s key cities, the Tuscan capital Florence generates
robust prices but remains more accessible than Rome, Milan, Venice and Naples.

The report says that uncertain economic conditions have led to a reduction in house buying activity. Transaction numbers in Italy fell by 33% between their peak in 2006 and 2011,with a further 7% annual decline in 2012.

According to Nomisma, house prices also lie some 10% below their peak in the first quarter of 2008 and holiday home prices have fallen slightly further, some 4.4% over the last 12 months, than in the main cities where they have dropped 3.4%.

‘Compared to other European hotspots which have seen holiday home prices cut by more than half, the Tuscan market has been far more stable. It is supported by a strong lifestyle rather than investment market, and it attracts wealthy purchasers who often tend to buy with cash,’ says the report.

‘Lack of large scale new development targeting overseas buyers has also meant that there is not a surplus of property on the Tuscan market,’ it adds.

Traditionally the holiday home market in Tuscany had been dominated by buyers from the UK but in the last five to eight years, the origin of buyers has become far more diverse. Buyers from Russia and other CIS countries, who have invested in London houses, have increasingly turned to Tuscany for a second or third home.

‘Over this period, their preferences have increasingly steered away from prime urban properties to quieter rural locations. Large, historic country homes with character, lying in easy reach of the region’s main towns, Florence, Siena and Lucca, and
within two hours of airports are the most sought after properties in Tuscany,’ says the report.

Although the Greek economy has contracted severely amid the global financial crisis, buy to let buyers are still active in the market.

Nominal house prices are now 22% below their peak in the third quarter of 2008, according to Bank of Greece data. ‘In the holiday home market this has led buyers to remain cautious and hold back from committing to a purchase, despite rising levels of interest. Nonetheless tourism continues to expand and the holiday home rental sector continues to benefit from this,’ says the report.

It points out that on the island of Mykonos, for example, in the current economic climate there has been a growing preference for larger, more opulent properties as the island attracts an increasingly wealthy audience. This year buyers from Gulf countries have dominated the market and buyers’ budgets have also risen to over €2 million on average.