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In 2008, with falling prices, sluggish sales and currency fluctuations, the credit crunch and global financial crisis have hurt real estate in places that have traditionally been the most expensive markets in the world.
On March 23, Knight Frank released the Wealth Report 2009, a survey of high-end, prime real estate around the world. The findings show big price fluctuations around the world in the 2008 calendar year, and even more dramatic swings from Q3 to Q4. The firm defines prime real estate as: "The most expensive 1% of property in each location. Commonly - but not always - this will relate to the US $1m+ segment - and often will comprise an international client base."
The findings also show that high-end real estate in emerging economies fared the better during 2008, with Bangkok (+22.5%), Jakarta (+17.7%) and Bali (+16.7%) rounding out the top three, and Moscow (+13.1%) not far behind. Some of the biggest losers in the luxury markets were the places that have traditionally been hot-spots for growth, but saw the big drops last year: Singapore (-14.6%), London (-16.9%) and Hong Kong (-24.5%).
So, in the past year of residential turmoil, what prime residential markets have weathered the storm? Stable or rising prices are a good measure of future development and the demand for investment. Click ahead to see the world’s most expensive high-end real estate markets!
By Paul Toscano
Posted 24 Mar 2009
Australia’s most populous city saw a decline of -11.9 percent in prime real estate prices over the course of 2008, but was somewhat able to buck the dramatic declines experienced by other markets in the final quarter of the year, with prices falling a relatively modest -6.4 percent. Sydney has the world’s 10th priciest prime real estate, at $1,440 per square foot.
In the Southeast Asian microstate of Singapore, space is an extremely limited commodity, and prime real estate is even harder to come by in a country approximately 3.5 times the size of Washington DC. Nonetheless, Singapore was one of the hardest hit prime real-estate markets in 2008, according to the 2009 Wealth Report, with prices dropping -14.6 percent, with a relatively low price drop of -2.2 percent in the final quarter.
The Roman prime real estate market was quite stable in 2008, and actually experienced growth throughout 2008. For the year as a whole, high-end real estate prices rose +1.4% in Rome, with a +0.4 percent growth in the final quarter.
The hardest hit prime real estate market in 2008 was the financial center of Hong Kong. One of the most densely populated areas in the world, it is also the world’s biggest loser when it comes to prime real estate prices. With Hong Kong’s high-end prices dropping -24.5 percent in 2008, the most dramatic moves of the year occurred in the final quarter, dropping a stunning -26.6 percent. Even with the losses, prime real estate in Hong Kong still makes the top 10, with prices o $2,060 per sq ft.
Japan’s largest city and capital experienced a price drop in prime real estate of -5.4 percent for 2008, with a -4.4 percent downward move in the final quarter. With a modest drop, Tokyo finds itself at #6, with high-end real estate fetching $2,080 per square foot.
Paris, France and Berlin, Germany were the only European cities that saw prime real estate prices in their areas remain truly stable in the final quarter of 2008, with no percentage moves. Last year also saw growth for Paris in the calendar year, with prime prices rising in the city +3.8 percent in 2008. With luxury real estate prices very close to Hong Kong and Tokyo’s markets, Paris’ stability has allowed it to rise to the #5 spot, at $2,100 per square foot.
Moscow is the highest priced example of how emerging market luxury real estate has been able to continue growth. The Wealth Report 2009 points out that Moscow’s successful price increases result from the relatively small size of the city’s prime market area and increase of high net worth buyers. Although prices made a cumulative +13.1% upward move for 2008, Moscow’s growth trended downward at the end of the year, with prices dropping -5.6 percent in the final quarter.
The financial capital of the world is no longer the capital for luxury real estate. The survey took into account the property in Manhattan, where a large portion of the high-end real estate is located. The third highest priced prime real estate in the world is found in Manhattan, with an average of $2,160 per square foot. In 2008, the city lost -4.1 percent in value over the entire year, with a drop of -3.2 percent in the final quarter.
London’s luxury real estate prices were among the hardest hit in the world, but compared to other prime markets around the world, London’s remains very high, with prices almost doubling that of #7 Rome. London’s prime real estate prices dropped -16.9 percent in 2008, with a drop of -9.4 percent in the final quarter. Despite the losses, luxury space in London will cost you, on average, $3,670 per square foot.
The most expensive luxury housing market in the world is Monaco, with a stunning average of $6,550 per square foot of prime real estate. Understandably, space is an extremely scarce commodity in the Mediterranean Monaco, with an area of 1.95 square kilometers, or just over .75 square miles. For reference, that is about three times the size of The Mall in Washington, DC. With prime real estate prices more than three times more expensive than New York, you’d think there may be a bubble in Monaco’s luxury market. Not exactly. In fact, for 2008, Monaco’s prime real estate prices rose +2.1 percent, despite a huge -10.7 percent drop in the final quarter of the year.
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