Location: London
Key headlines:
- After two years of growth the world’s prime markets look set to cool in 2012
- Our forecast for 2012 is evenly split with 44% of the cities monitored forecast to see price falls, 44% likely to experience price rises and 12% expected to remain unchanged
- Given the global economic turmoil it might seem surprising we are forecasting prices rises in 44% of the cities monitored. In many of these cities the critical factor is a lack of quality new supply. We expect this to be particularly evident in London, Paris, Moscow, Nairobi and Kuala Lumpur.
- In those cities forecast to see price growth this will be underpinned by the flow of capital from the world’s troubled regions and a desire amongst the wealthy to target property and other real assets over financial products
- Over 60% of the Asian cities monitored are forecast to see price falls in 2012 as government measures aimed at dampening speculative demand start to take effect
- The Eurozone crisis is considered a high risk for 60% of the cities covered. Political and security issues present the greatest risk to the housing markets in the Middle East and Africa.
- Interest rates, high inflation and consumer debt represent the smallest risk to the world’s luxury housing markets reflecting the affluent, more equity-rich buyer profile for this market
Liam Bailey, head of research at Knight Frank commented: “There are three key themes which will determine the performance of prime city markets in the short- to medium-term: the scale of global wealth generation, the ongoing search for ‘safe-haven’ investments and the growing divide between the prime markets in the West and the rest of the world.”
Commenting on the slowdown in prime markets Kate Everett-Allen, international residential research said, “The slowdown in luxury price performance is most evident in Asia. Here, the flood of cheap money brought about by a surge in domestic wealth and stimulus measures in the US and Europe was followed by a wave of monetary tightening measures to squeeze inflation. As a result the annual price growth of luxury homes in Hong Kong, Singapore and Shanghai now stands at 7.8%,-6.8% and 3.8% respectively, down from 19.7%, 15.8% and 29.7% a year earlier.”