Aug 01, 2012
RESIDENTIAL RESEARCH
Prime Global Cities Index
Prime property in world's key cities sees strongest growth since 2010
The value of prime property in the world's key cities rose by 1.4% in the second quarter of 2012. Although some way off pre-recession levels, it has been 18 months since the index achieved a similar rate of quarterly growth. Kate Everett-Allen examines the latest data
Results for Q2 2012
The index rose by 1.4% in the second quarter of 2012, its strongest quarterly price growth since Q4 2010 Prime prices across the 27 cities monitored increased by 3.5% in the 12 months to June 2012 European cities saw average prime price growth reach 1.3% in the year to June, an improvement on the -3.4% recorded in the year to March 2012 Bangkok (up 29%) was the strongest performer in the last 12 months The outlook for most prime markets is muted, with price inflation curtailed by protectionist measures in Asia and the Eurozone crisis
Since its low in Q2 2009 the Prime Global Cities Index which tracks the performance of the top 5% of mainstream housing markets has been largely subdued, recording average quarterly growth of 0.8%. The buoyant Asian markets kept the index in positive territory up until Q1 2012 when cooling measures, and in particular restrictions on second-home ownership, led to a fall of 0.4% in the first quarter of 2012. That said, Asia and Europe have proved critical to the index's recovery in the second quarter. Prime prices in Asia rose by 3.4% in the year to June, the equivalent figure in March was -2.5%. Similarly, prime prices in Europe rose by 1.3% in the year to June, an improvement on the -3.4% recorded in the year to March. Asia's resurgence in the second quarter can largely be attributed to the strong performance of its emerging markets, namely Jakarta and Bangkok, rather than its traditional powerhouses of Singapore and Hong Kong. The growth in Europe's prime prices has taken place despite or possibly because of the deepening Eurozone crisis. With the prospect of more bailouts looking increasingly likely, prime buyers and investors seem to have separated European cities into different tiers. Buyers and investors are no longer just concentrating on those cities that attract a high level of international demand and a good quality of life but the latest results suggest they are
Figure 1
increasingly seeking prime property in those cities best sheltered from the EU debt debacle. London, Geneva, and Zurich are all positioned in the top half of the Q2 results table having recorded annual price growth of 10.5%, 6.0%, and 5.9% respectively (see page 2). According to James Price, of Knight Frank's International Residential Development team, the positive performance of some of the more established cities in Europe and the US suggests that a `flight to safety' remains the defining characteristic of international purchasers and investors. James adds: "The appeal of cities in stable economies is being brought into marked contrast with the investment environment in weaker countries. This city-level data should not however be taken as a reflection of the whole country; prime second-home destinations outside the cities may still perform well in a poorer performing wider market." Despite the positive results in Q2, the overall outlook for the world's prime markets is muted. We are unlikely to see significant sustained growth given the numerous downside risks facing the global economy. Europe's economic frailty together with the introduction of more protectionist measures in Asia (aimed at improving affordability for domestic buyers), is expected to inhibit price inflation within both the mainstream and prime markets for the remainder of 2012.
Figure 2
12-month price change
Bangkok# Jakarta Nairobi Miami London New York Geneva Zurich* San Francisco* Cape Town Vienna Dubai** Moscow Hong Kong Beijing Los Angeles* Kiev Mumbai Madrid Kuala Lumpur Paris Monaco Rome Singapore Sydney Shanghai Tel Aviv*
Prime property price change by city
Aggregate performance
25 20 15 % change 10 5 0 -5 -10
Unweighted average change in prime property prices
"We are unlikely to see significant sustained growth given the numerous downside risks facing the global economy."
Kate Everett-Allen, International Residential Research
-10
-5
0 5 10 15 20 25 30 12-month % change
Q1-Q4 Q1-Q4 Q1-Q4 Q1-Q4 Q1-Q4 Q1-Q2 2007 2008 2009 2010 2011 2012 3-month % change
Source: Knight Frank Residential Research
#Condominiums only
*Data to Q1 2012 ** Apartments only
12-month % change
Source: Knight Frank Residential Research
RESIDENTIAL RESEARCH
Prime Global Cities Index
Data digest
The Knight Frank Prime Global Cities Index established in 2011 is the definitive means for investors and developers to monitor and compare the performance of prime sales markets across key global cities. Prime property corresponds to the top 5% of the mainstream housing market in each city. The index is compiled on a quarterly basis using data from Knight Frank's network of global offices and research teams.
5-year performance
Top 10 cities by 5-year prime price growth*
Knight Frank Prime Global Cities Index, Q2 2012
Rank City World Region
Asia Pacific Asia Pacific Africa North America Europe North America Europe Europe North America Africa Europe Middle East Europe Asia Pacific Asia Pacific North America Europe Asia Pacific Europe Asia Pacific Europe Europe Europe Asia Pacific Asia Pacific Asia Pacific Middle East
Rank 1 2 3 4 5 6 7 8 9 10
City Jakarta Beijing Hong Kong Shanghai Moscow Mumbai
5-year % change
(Q2 2007-Q2 2012)
12-month % change
(Jun 11Jun 12)
6-month % change
(Dec 11Jun 12)
3-month % change
(Mar 12Jun 12)
Latest data if not Q2 2012
88.3% 84.0% 58.5% 47.4% 28.6% 27.8% 25.8% 24.9% 23.6% 21.2%
Kuala Lumpur London Paris Manhattan
*based on cities where 5-year data is available
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Bangkok* Jakarta Nairobi Miami London New York Geneva Zurich San Francisco Cape Town Vienna Dubai** Moscow Hong Kong Beijing Los Angeles Kiev Mumbai Madrid Kuala Lumpur Paris Monaco Rome Singapore Sydney Shanghai Tel Aviv
28.8% 28.5% 21.8% 13.4% 10.5% 7.4% 6.0% 5.9% 4.2% 4.1% 3.8% 2.3% 1.6% 0.3% 0.0% -0.1% -2.1% -2.5% -4.1% -4.2% -4.5% -5.3% -5.8% -5.9% -5.9% -8.7% -9.0%
26.0% 20.4% 3.0% 17.4% 5.5% -2.4% 3.3% 4.7% 2.6% 0.5% N/A 5.6% -0.8% 4.9% -1.4% -2.4% -12.5% 0.0% -1.9% 0.1% 0.0% 0.0% -7.1% -3.9% -0.8% -3.2% -5.1%
15.6% 9.2% 3.0% 19.7% 2.7% 1.9% -5.0% 1.3% 2.9% 0.0% N/A 1.8% -1.8% 3.8% -0.3% -0.7% -6.5% 0.0% -0.9% -0.4% 0.0% 0.0% -7.1% -5.7% 0.0% 0.0% -2.0%
Q1 2012 Q1 2012
Q1 2012
Q1 2012
Source: Knight Frank Residential Research *Based on condominiums only **Based on apartments only
Residential Research Kate Everett-Allen International Residential Research +44 (0)20 7861 1513 kate.everett-allen@knightfrank.com Press Office Bronya Heaver +44 (0)20 7861 1412 bronya.heaver@knightfrank.com
Recent market-leading research publications
The Wealth Report 2012
Hong Kong Monthly July 2012
Global House Price Index Q1 2012
Asia Pacific Residential Review June 2012
Knight Frank Research Reports are available at www.KnightFrank.com/Research
Notes to Editors Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 242 offices, in 43 countries, across six continents. More than 7,067 professionals handle in excess of US$817 billion (£498 billion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit www.knightfrank.com.
© Knight Frank LLP 2012 - This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by Knight Frank Residential Research or Knight Frank LLP for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank Residential Research. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Registered office: 55 Baker Street, London, W1U 8AN
