Buyers are now on the search for luxury when investing in property, according to new figures from Knight Frank. The Prime Global Cities Index for the third quarter of 2012 revealed that people are turning to high-end bricks and mortar, as strong-performing alternative asset classes are becoming few and far between.
Some 26 cities across the world were tracked in the index and a three per cent increase in the 12 months to September was registered. For the quarter, the index increased by 1.1 per cent. While this was a drop of 1.4 per cent from the second quarter of 2012, it capitalises on the positive growth enjoyed over the year.
However, the weakest performers have been in Europe, with an average drop of 0.5 per cent over the year to September. The exception to this fall has been London, which is among the top three cities for price growth, alongside Hong Kong and Beijing. The capital has enjoyed a 45.4 per cent increase in property prices since the 2009 second quarter low at the height of the financial crisis.
London is now among those cities targeted as an investment hub for high net worth individuals, escaping the downward residential market trend experienced by other prime markets, such as Paris. Indications of positive third quarter growth were already noted in June. The Global Property Market reported that prime residential London property prices increased by 0.8 per cent throughout the month. Dubai, Miami and Nairobi are also performing well, with Dubai attracting many Middle Eastern and North African buyers following the Arab Spring.
James Price of Knight Frank’s International Residential Development team commented: "Aside from London, it would appear the other strong performers are either those established international markets that experienced a lull but are now ‘kicking on’ again - e.g. Miami, Dubai - or those that could be described as second tier international cities – strong established markets, but not global ‘gateway’ cities - e.g. Zurich, Vienna, San Francisco - where interest has driven price rises from a lower base.
"While some of the more traditional prime second-home markets are recording negative movement, this should not disguise their long-term popularity and strength, instead it suggests a cooling from previous higher levels."
- Thursday 08 November 2012