London: First Port of Call for Luxury Real Estate – Christie’s

17/04/2014
If you had some money and were looking for luxury real estate, then London was the first port of call last year. But maybe not for much longer.
London saw a 20% growth in the number of luxury properties sales, while Paris experienced a 12% jump respectively and Hong Kong actually saw a decrease of 15% year on year as its government brought in measures via taxes and adjustments in interest rates to cool the market. This is according to a new report published Wednesday by Christie’s International Real Estate.

The report, entitled “Luxury Defined: An Insight Into the Luxury Residential Property Market,” is based on data gathered from 10 markets – from San Francisco to Sydney.
The research also shows the average number of days a high-end property stays on the market decreasing in some key markets, with properties in London staying on the market 16 days less in 2013 than the previous two years. In New York, a property stayed on the market for an average of 77 days last year compared with 111 days in 2011.
“Quite simply there isn’t enough supply of properties in key global centers to meet demand,” said Giles Hannah, senior vice president of Christie’s International Real Estate based in London. “People are wishing to secure their wealth into properties particularly in London, Paris and Dubai. [Wealthy individuals] are looking for lifestyle, luxury and a trophy asset.” The report also said the “momentum” in the market is partly explained by “substantial wealth creation” last year.
The premium market consists of foreign buyers who have cash in hand and are not subject to financing. As a result they can move quite quickly when it comes to securing a house. “This creates a market where there are not enough properties,” said Mr. Hannah. “Most of these markets have three or four buyers for each house, which means big prices are being achieved.”
The English capital “leads the way of top performing residential sales achieved globally with $101.5 million being the highest value sale in the last twelve months,” said Mr. Hannah. But there are signs high net worth individuals might start looking away from the traditional wealthy post codes in London as other global cities over better value for money. Paris is 50% less expensive than London and New York 30% less expensive, according to Mr. Hannah.
“People have not necessarily been prepared for such high prices in the traditional strong areas,” added Mr. Hannah. “You will see slightly less price growth in areas such as Mayfair and Knightsbridge and Chelsea over the next 12 to 18 months because people will start buying in other locations so the market will slow down a bit.” However, Mr. Hannah still estimates general price growth in London of up to 30% over a five-year period following the General Election in the U.K. next May.

By: blogs.wsj.com

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