The global prime property market started 2012 stumbling out of the gate, say experts at Knight Frank. The most recent index measuring the values of the most sought-after properties shows a 0.4% drop in the first quarter of the year. Experts blame the persistent Eurozone debt crisis and a round of recent elections that produced some unexpected results. While the overall average dipped slightly there were some markets that saw marked improvement, including Miami, Jakarta, Nairobi and London. Some markets also experienced growth in the very upper tier of the real estate spectrum, which helped offset the slip. For more on this continue reading the following article from Property Wire.
The value of prime property in the world’s key cities fell by 0.4% in the first quarter of 2012, according to the latest index from Knight Frank.
It is the index’s first quarterly fall since the depths of the global recession and although a milestone, Knight Frank said the index’s negative quarterly growth is not surprising. Indeed, quarterly price growth has been below 2% since the beginning of 2010 and it averaged only 0.6% in 2011.
The first three months of 2012 brought with it little new momentum. The Eurozone’s debt debacle remained at the forefront of the global economic agenda, several critical elections were on the horizon in Russia, France and Greece and Asia’s highly effective cooling measures showed no sign of being relaxed. Against this backdrop some luxury buyers took to the side lines to observe the market.
Despite the overall index’s sluggish performance four prime markets, Nairobi, Jakarta, Miami and London achieved double digit growth over a 12 month period.
London and Singapore are proof that there is still a level of resilience in the prime markets with both cities shrugging off the introduction of new stamp duties in the first quarter of 2012. In London both prices and applicant numbers increased despite the stamp duty rise to 7% for individuals buying homes over £2 million.
In Singapore the new 10% stamp duty for foreign buyers, which was introduced in December 2011, dented demand but not prices according to Nicholas Holt, Knight Frank’s Asia Pacific research director.
‘Prices not only held up but actually increased slightly at the very top end of the Singapore market in the first quarter of 2012. This was not only due to fairly resilient domestic demand, but also due to wealthy Chinese, Indonesian and Indian buyers who continued to buy in this segment of the market undeterred by the surtax,’ he explained.
Prime markets performed strongly in North America with prices increases by an average of 7.7% in the last 12 months. While prices in Dubai increased the most in the last three months, recording a rise of 4%.
Knight Frank believes that overall the index will remain subdued in 2012 fluctuating between marginal price falls and rises with London, Moscow, Jakarta, Nairobi and Singapore expected to be the strongest performers. But it seems unlikely that there will be a new deflationary cycle in luxury global house prices.
‘The safe haven argument still resonates. Capital flight will continue to focus on cities with low political risk, transparent legal systems, good security and ideally those with an HNWI-friendly tax regime,’ said Kate Everett-Allen, head of International Residential Research.
This article was republished with permission from Property Wire.