Jakarta ranked world’s top prime property hotspot
The overall average price of luxury homes in the world’s key cities fell by 0.4 per cent in the first three months of 2013, as cooling measures in many Asian cities took effect. On an annual basis, though, luxury property prices grew by 3.6 per cent across the world. Indeed, a typical prime property is now worth 21.3 per cent more than in 2009, when Knight Frank’s index hit a post-crisis low.
Photo credit: Yohanes Budiyanto
Cities in Asia, North America and the Middle East continue to dominate the top half of the prime real estate rankings results table. European cities, on the other hand, populate the lower rungs of the luxury property ladder.
Tokyo saw the biggest dip in prices, with values plummeting by 17.9 per cent in the last year. Despite this, Knight Frank notes, the Bank of Japan has announced “radical” new monetary-easing measures, which is already encouraging demand for prime property.
Paris, Madrid and Rome also saw values drop by over 10 per cent year-on-year, as the eurozone crisis continues to take its toll, making luxury property more affordable for wealthy investors. New York saw a decline of 9.9 per cent in the first quarter, which Knight Frank attributes to a rush to complete sales in the final quarter of 2012 prior to the fiscal cliff.
But with values dipping across the globe and austerity measures more stringent in its neighbouring markets, Jakarta jumped to the top of the chart with the world’s strongest price growth. Bangkok saw the second highest increase of 26.1 per cent thanks to a similar rise in new middle class wealth.
Increasing demand from Latin American investors in Florida drove Miami property prices up 21.1 per cent. Brazilian, Argentine and Venezuelan buyers pushed the city’s luxury values up, cementing Florida’s position as a global real estate hotspot.
The only two European cities to record double-digit price growth in the 12 months to March were St Petersburg and Monaco - both ahead of London. While the UK capital saw prices climb by 8.1 per cent annually, luxury homes in Monaco increased by 10 per cent in value in the first three months of 2013 alone, with limited housing supply and growing interest fuelling growth.
“Unlike Japan, the governments of China, Hong Kong, Malaysia and Singapore face the opposite challenge; trying to restrain growth,” comments Kate Everett-Allen, Knight Frank’s International Residential Research Coordinator. “As the latest edition of our Asia Pacific Residential Review explains, Asia’s policy makers are not only introducing more lending restrictions, taxes and regulations, but the strength of these measures has been stepped up in recent months.”
But while many prime markets have seen values dip, the outlook for luxury property is positive for 2013.
Kate concludes: “In each year since 2009, our Prime Global Cities Index has repeatedly recorded its weakest rate of growth in the first quarter of the year. As a result, we expect stronger growth to emerge in the second quarter as buyers continue to search for luxury bricks and mortar as a way of sheltering their assets from the Eurozone’s continuing turmoil and the fragile global economy.”
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