How far will your money go when investing in properties on a global scale?
by Peter Gilmour, REAL Trends chief foreign correspondent
In the last 15 years, the world has seen an acceleration in the globalization of demand for property for both residential and investment purposes. Many high-net-worth individuals are looking at new global locations in which to diversify their portfolios and their lifestyles.
The release of the 10th edition of the Wealth Report by Knight Frank provides authoritative commentary on the latest global property trends.
London Tops for High-Net-Worth Individuals
The report has rated the top 10 most important cities that matter most to high-net-worth individuals, based on where they live, spend their leisure time and grow their businesses. This year London has proved to be the No. 1 city followed by New York. No other city challenges these two when it comes to overall appeal. London’s geographical position means that within a two-hour flight, the city is accessible to twice as many high-net-worth individuals than New York, which explains its importance. Singapore has made significant strides to move into third place, with Dubai and Hong Kong rounding off the top five places. Shanghai and Paris have both been in the top 10 cities on a regular basis, but this year Sydney, Beijing and Geneva have risen to top out the 10 most important cities.
Adding to Wealth Portfolios
In recent times, the world has experienced a low-interest rate environment which has encouraged individuals to add residential property to their wealth portfolios. Regarding the price performance of the world’s luxury residential markets, the report’s Prime International Residential Index tracks the price changes across a hundred locations. Prime residential markets rose 1.8 percent in 2015 globally, just down from the 2 percent recorded in 2014.
Given these changes, how much will the dollar buy in these markets? For the ninth year, Monaco is the world’s most expensive city to buy residential property with $1 million buying just 185 square feet of accommodation. Monaco is closely followed by Hong Kong and London, which occupy the next two places offering 215 square feet and 239 square feet respectively. New York occupies the fourth position and is the highest-ranked U.S. city where $1 million will buy 293 square feet of accommodation. Los Angeles and Miami are in eleventh and thirteenth places. The only Southern Hemisphere cities in the top 20 are Sydney in the sixth position, São Paulo in the nineteenth position and Cape Town in twentieth position, where $1 million will buy 2745 square feet of accommodation. The trends of globalization and urbanization are likely to continue throughout the world, and price rises are slowing, which will lead to increased cautiousness by investors in the year ahead.