International View

2018

InternationalView

PROPERTY CONTENTS

38 Europe & The United Kingdom

104 Africa & The Middle East

EUROPE BOUNCES BACK In the first instalment of our newData View column, International View invites you on a whistle-stop tour of the world’s key luxury propertymarkets by Kate Everett-Allen

D istilling the global market for luxury homes into one index isn’t easy, but Knight Frank’s Prime International Residential Index (PIRI), which I compile, brings together the performance of 100 of the world’s most popular or important ski, sun and city locations. Many of the areas featured in the PIRI 100 are second- home hotspots, while others are leading urban centres. In each market we look at the performance of the homes sitting on the top rungs of the housing ladder where international buyers tend to be more prevalent. But enough of the research chat, what you really want to know is which markets are hot, and which are feeling a little Khilla. ?ell, let¼s looS at -uroXe Årst. .or the Xast deKade the prime residential market there has been struggling compared with other parts of the world. Economic uncertainty has meant prices have been falling or stagnating in many of the locations we track in PIRI. Last year, however, things started to pick up as the outlook became more optimistic. Amsterdam (+15%), Frankfurt (+13%), Paris (+12%), Madrid (+11%) andMunich (+10%) all saw double-digit growth, while the Western Algarve in

the inde` _e Ånd /uanObhou _ith staOOerinO Oro_th of over 27%. What’s even more remarkable is that mainland China’s third largest city had already seen a similar level of growth in 2016 when it occupied the third spot in the PIRI 100, behind Shanghai and Beijing. Measures by the Chinese government to take some heat out of the country’s burgeoning property markets saw growth in Shanghai and Beijing fall to “just” 9% and 7%. *ut /uanObhou¼s relati^e a ٺ ordaJilita · house XriKes Xer square metre are about half those in Shanghai – meant it powered on regardless. Elsewhere in Asia, a limited supply of quality homes to buy – coupled with more positive economic signals – pushed up prices strongly in Seoul (+13%), Hong Kong (+7%) and Singapore (+6%). In India, however, monetary and policy interventions have proved challenging to prime residential markets, although Mumbai still ended the year in the black – up by almost 1%. Australasia’s main cities have been nudging double-digit territory – prices in Sydney, again driven by a lack of supply, rose by almost 11%, closely followed by Melbourne on 10%. In New Zealand, values in Auckland were up 6.5%.

The one thing that the PIRI 100 consistently highlights is that while we can see broad trends emerging and the performance of close-by locations can sometimes move in tandem – such as Europe’s resurgence this year – it is impossible to generalise about the performance of property markets within a country, let alone a continent. Take South Africa, for example. Despite the drought, Cape Town’s most sought-after suburbs took second place in the PIRI 100 with an annual growth of 20%, while Johannesburg – the country’s business hub – saw prices fall fractionally. And if we head north to the west of Africa, we Ånd 4aOos in 6iOeria lanOuishinO at the JottoU of 81:1 with a drop of 25% – a full 52 percentage points behind /uanObhou. North America is another case in point. The US ski resort of Aspen took third place in PIRI this year with a price jump of 19%, while average values in New York rose by a less spectacular 5%. Further north, a tightening of capital controls in China and new property taxes pegged back growth in Vancouver and Toronto from around 15% in 2016 to 4% and 9% respectively last year. Having tracked these markets for a while, the main

112 The Americas & The Caribbean

40 /re^iTTiI ;Iint2eIn+Ip.errI  .eIt]re 8roperta

Portugal and Italy’s Ligurian coast were the top second-home performers with prices rising 7%. Not everywhere across the continent is doing quite so well though. Purchase tax increases and, to a lesser extent, Brexit, continued to hold back London’s prime market, which lost almost 1% in value, although this was considerably less painful for homeowners than the 6% fall seen in 2016. It was second-home locations that bucked the upwards trend most obviously. With a price slide of 10.5%, Umbria in Italy was one of the PIRI 100’s biggest fallers last year; the sun also didn’t shine on St Tropez – down 5%. And the rest of the world? As ever, it’s a mixed picture. Heading right to the top of

reason for these disparities is clear: there are so Uana intert_ined faKtors a ٺ eKtinO property prices. While in the past they would have been largely economic – once upon a time, house prices in the UK generally lagged the stock market by about seven months – government policies now play much more of a role, and the increasing mobility of wealth means money can be switched much more easily from one part of the world to another. Looking at all the geopolitical issues facing the world in 2018, I expect the next instalment of the PIRI 100 to be equally, if not more, disparate. Kate is Knight Frank’s Head of International :esiLentiIT :eseIrKh Ao] KIn finL f]TT 81:1 results at knightfrank.com/wealthreport

94 )siI 8IKifiK

Vernazza on the Ligurian coast in Italy

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