Asia Pacific leading global real estate recovery, report confirms

An increase in the number of millionaires in Asia Pacific could be fuelling the recovery, according to the second quarter International Residential Review from Chesterton Humberts.
 
Its says that the number of high net worth individuals (HNWIs) is rising fastest in the Far East with Singapore, Malaysia and China all recording growth of 35%, 33% and 31% respectively.
 
The report also shows that Monaco remains the most expensive area for resale property at €45,000 per square meter while St Jean Cap Ferrat in the South of France coming second at €32,500 per square meter and London coming third at €22,500 per square meter.
 
Hong Kong, New York and London are the most expensive places in the world for new property at €19,500, €16,750 and €16,500 per square meter respectively.
 
‘Disparities in the performance of global residential markets remain apparent in the post-recession era. The star performers are in the Asia Pacific region while recovery in Europe and North America is more laboured with transaction volumes remaining well below pre-recession levels,’ said Andrew Hawkins, head of international at Chesteron Humberts.
 
‘Outside the Asia Pacific region, it is the prime segments which have in most cases recovered first. This reflects the combination of a smaller supply of available properties and the greater purchasing power of HNWIs, who are seeking desirable properties still selling at a discount to pre-recession levels,’ he explained.
 
‘Appetite for prime residential property both for lifestyle and investment reasons remains firm although buyers are generally taking longer to commit to purchase decisions than in the pre-recession market. Statistics from Primelocation confirm a healthy increase in buyer interest for high-end properties: searches for international property on their website rose by 109% between May 2009 and May 2010,’ he added.
 
The report points out that prime property is serving its time honoured role as a refuge in times of international upheaval and uncertainty in currency markets this year has motivated some buyers, particularly those in US dollar based currencies, who have benefitted from the strengthening US dollar.
 
It says that a number of Asian markets have made up most of the ground lost between 2008 and 2009 and in China and Singapore there is still talk of another bubble looming.
 
But the situation with regard to the prime residential markets is somewhat different. Whereas buyers at the lower end of the market are typically more constrained financially and are consequently unable or unwilling to commit to a second home overseas, any hesitation on the part of the prime buyer is usually more to do with timing or a shortage of available quality stock in preferred locations.
 
‘This latter factor has partially explained some of the strong price recovery in many iternational prime locations. The desire for lifestyle purchases is as strong as ever and for those with sufficient spare capital to invest or with good access to credit the attractions
of a second home are undiminished. Indeed, several wealth surveys undertaken over the past year point to increased appetite for residential property among the global HNWI community,’ the report adds.
 
‘Moreover, from an investment perspective it makes sense to have a diversified portfolio which includes property as equities will always be volatile, savings accounts will remain unexciting in a low interest rate environment, while pension prospects continue to diminish with the passage of time. There are still discounts available in many markets,’ it concludes.