Prime properties in the world's global cities have been considered'safe haven' investments by smart minded buyers for the past three years, according to a recent study by London-based real estate consulting company Knight Frank. Amid fears about sovereign debt and geopolitical unrest, wealthy investors pursued the protection of luxury real estate in key cities like London, Moscow, and Hong Kong. flats for sale in qatar
Now, for the first time since the global recession struck in 2008/09, fresh indicators are emerging that luxury property prices around the world are collectively softening. Fears about unresolved sovereign debt problems in the eurozone and the United States seem to be affecting buyer confidence. Despite the fact that the credit crisis and subsequent lending restrictions had only a minor impact on the prime sector in 2008/09, affordability problems have emerged, even among affluent buyers, and a more cautious atmosphere is developing.
Key International Price Results for the Third Quarter
In the year to September 2011, prime property prices increased by 4.3 percent on average across all 21 global cities tracked by the index, the slowest annual growth in two years.
Prime property prices rose 15.1 percent in Jakarta but dropped 17.9 percent in Mumbai over the last 12 months, indicating that Asian cities are no longer operating as a unified entity.
Luxury house prices fell by 11.6 percent in the year to September in St Petersburg, the city with the highest drop in the third quarter.
Over the last 12 months, prime property prices rose in 15 of the 21 cities tracked by the index, but only eight cities saw increases in the last three months.
On a regional level, Europe outperformed Asia, with prime property prices increasing by 6.7 percent annually on average, compared to 2.0 percent in Asia.
Despite the current economic downturn, it is crucial to see the long-term picture and consider how prime property not only recovered more quickly from the 2008/09 recession, but also experienced some remarkable price increases in the interim.
Prime property prices in London and New York are now 37.2 percent and 25.3 percent higher than their recessionary lows, respectively. But it is Asia that grabs the headlines: luxury homes in Hong Kong are now 71.7 percent higher than they were in Q4 2008, while Shanghai and Mumbai saw 115 percent and 220 percent growth from trough to peak, respectively.
A major contributor to the index's quarterly decline is the cooling of Asian cities' prime markets. As the speed and efficacy of government deflationary policies begin to vary from city to city, the near-uniformity of Asian house price growth seen over the last two years is becoming less apparent.
According to Frank Knight, the prime market will continue to be less vulnerable to global economic threats than most conventional housing markets. We believe that luxury homes in major global cities will maintain their safe-haven status, but they will draw less speculative investors looking for a quick profit.