Property Talk

Fascination with the worlds leading prime residential markets

Having recently travelled to Dubai and experienced the world's tallest building first hand, the fascination with the worlds leading prime residential markets is something most of us are intrigued by and like to dream about. Everything is relative - a Zimbali beachfront mansion at R35m is equivalent in value to a modest apartment in the Burj Khalifa in Dubai.

An outstanding global resource on research into the world's top end residential market is Knight Frank's Wealth Report which features the Prime International Residential Index (PIRI), which tracks the value of luxury homes in 100 key locations worldwide. The most recently published research indicates that a huge gap is emerging between the top and bottom ranked destinations. The top tier is completely dominated by cities in China, New Zealand (believe it or not), Canada and Australia. The oil dependent markets such as Moscow and Lagos now bring up the rear showing the impact a depressed oil price has had on those cities.

Although on average the locations tracked (61% of them) by PIRI indicate flat or rising prices. However what is interesting is to see the outstanding performance of those dominating the top slots. Three Chinese cities claim the top three spots being Shanghai, Beijing and Guangzhou with eye watering growth in high-end residential prices of 27,4%; 26,8% and 26,6% respectively.

A significant gap then opens up before the next four top locations emerge being Seoul (16,61% growth), Auckland (16%), Toronto (15,1%) and Vancouver (14,5%). Europe features in position 8 and 9 with Amsterdam (10,1%) and Gstaad (10%). Seattle (9,7%), Sydney (9,3%), Melbourne (8,8%) and Berlin (8,7%) follow next just ahead of the first African city. Yes you guessed it correctly, Cape Town comes in at position 14 with 8,3% growth.

So who are the big losers in terms of price movements From position 62 onwards, negative price growth occurs, accelerating as we progress down the list. Not surprising Rio de Janeiro with -6,2% growth is near the bottom, but interestingly London and Zurich's top end residential markets are at the lower end with reductions in pricing of -6,3% and -7% respectively. The bottom two slots are taken by Moscow (-11,2%) and Lagos (-22%).

The comparative of relative values in terms of the number of square metres of prime property a budget of US$1m buys you ranges from a mere 17 sqm in Monaco as the most expensive, just ahead of Hong Kong (20 sqm), New York (26 sqm) and London (30 sqm) to Cape Town at a more reasonable 209 sqm.

It is interesting that Monaco, and ultra-exclusive 2 sq km enclave, has held the most expensive rate per sqm globally for the past 6 years. If somebody tells you that they own a home in Monaco, the chances are they can afford one of our local luxury properties. For those South Africans who are considering and investment in Sydney or Melbourne, the rates per sqm for high end residential properties average 59 sqm and 110 sqm respectively per US$1m. Suddenly Zimbali sounds like a great buy.