Billionaire owners of “ultra prime” homes have watched the values of their properties soar through the global economic turmoil, particularly in the emerging financial centres of Mumbai and Singapore.
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The spike in value of these properties – defined as homes worth in excess of £10 million ($15.7 million) – has been far less marked, however, in the western cities that have traditionally played host to the world’s wealthy elite.
According to new research from Savills, the estate agent, billionaire homeowners in Mumbai and Singapore have seen the value of their properties increase by 138 per cent and 144 per cent, respectively, during the past five years. By contrast, the value of ultra-prime homes in London and New York have appreciated by less than 40 per cent during the same period.
The property market in each of the cities – in terms of both pricing and style of living – examined in the Savills report, is driven by a multitude of factors.
In Hong Kong, for example, space in the wealthy Peak area of the island is at such a premium that billionaire buyers are willing to spend on average £6,700 per square foot.
The figure is more than double the £3,090 per square foot the average billionaire homebuyer will spend in London.
“Many more of the world’s billionaires are being created in China, rather than in New York or London, and it is shifting the buying patterns,” said Yolande Barnes, director of residential research at Savills.
“There are so many barriers for China’s billionaires getting into Europe or the US, whereas it is relatively easy for them to repatriate wealth out of mainland China and into Hong Kong. The result is that ultra-prime property prices in Hong Kong have exploded,” Ms Barnes added
However, a typical billionaires’ residence in Hong Kong spans just 5,200 square feet compared with 19,380 square feet in Sydney – the size of a small supermarket – where it is more fashionable to have large residences on the outskirts of the city.
While price growth in the emerging financial centres is an obvious lure to cash-rich buyers, the stability of high end property in London, New York and Paris continues to attract international investment.
In London, the market for the most expensive homes is increasingly driven by interest from overseas buyers, many of whom see the UK capital as a haven in which to park their money, and it attracted £3.3 billion of inward investment last year.
In addition to its perceived status as a politically and economically secure environment, London experiences demand from buyers wanting access to the country’s education system.
Paris and New York have experienced similar growth in demand from overseas homebuyers. This interest also extends beyond the super-rich. Some new housing developments in these markets aimed at middle-income buyers are being marketed to foreign buyers.
Overall, the value of ultra-prime properties has climbed by 65 per cent during the past five years.
And, during the first six months of 2011, billionaires saw their homes increase by 10 per cent in value, compared with just 6 per cent for the wider housing market in the 10 cities.