This increasingly global lifestyle has led to the stateless super-rich buying a larger portion of the world’s most expensive homes as they look to park their wealth in perceived havens. On average they own four to five properties, usually consisting of two in their country of principal residence, one in a “global city” such as London, Paris or New York, and a holiday home in a hot climate – or one in the Alps.
Exclusive research for the Financial Times by Knight Frank shows that foreign buyers now dominate sales of “super-prime” homes – typically defined as the top 5 per cent of the most valuable properties – in the world’s major cities.
“I am not surprised that these top-end markets are so international in terms of their buyers, the reality is the super-rich who buy these properties live increasingly global lifestyles,” says Liam Bailey, head of research at Knight Frank. “The super-prime market wouldn’t exist without a global market – it only really got going in the past 15 to 20 years as Russian money poured into London and Monaco.”
This has led to many countries’ super-prime property markets being increasingly dominated by international buyers, turning some cities into playgrounds for the wealthy. The international rich have long-favoured Monaco – confirmed by figures showing 100 per cent of its super-prime property is sold to international buyers – but this demographic now buys as much as 95 percent of the expensive homes in Paris, and 85 percent in London.
While these individuals have seen their property investments pay off as high-end housing markets around the world have soared on the back of this strong demand in recent years, it has also resulted in a number of knock-on social consequences for the domestic populations of these emerging global cities.
David Adam of Global Cities, a consultancy that works to improve cities’ success in international markets, acknowledges that the globalization of cities can have an impact on their resources.
“Cosmopolitanism begins in cities but the challenge for many places will be to ensure that national citizenship enjoys the benefits of this international experience and the local economies are not left behind,” he says.
The most obvious impact in many global cities has been to change the visual order of these cities, especially in well-to-do and desirable areas.
Saskia Sassen, a US sociologist at New York’s Columbia University and author of Cities in a World Economy (Sage), says this often comes with a change in the scale and appearance of homes. “Even very good architects manage to generate a style that is not usually much admired by engaged residents and passersby, whether the poor aficionado urban historian, old wealth, or anti-gentrification activists,” says Sassen.
Another social impact, perhaps more difficult to measure, is the dilution of what is referred to as the “civic” quality of an area, explains Sassen. “It can feel less like a neighborhood and more like a corporate district in the low density of street life,” she says.