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Prime International Residential Index - Wealth Report 2009

23 March 2009

2009 Knight Frank/Citi Private Bank Wealth Report

Release  - Prime International Residential Index

Growth turns negative for luxury house prices around the world, according to latest Knight Frank residential research

Key research highlights:

  • On an annual basis, just under 50% of the locations featured in the Knight Frank Prime International Residential Index (PIRI) managed to record positive price growth during 2008
  • By the final quarter of 2008, however, prices had either stalled or fallen in 75% of locations
  • Previously buoyant markets can turn very quickly. Property prices in Dubai, for example, rose by almost 11% overall in 2008, but fell by 19% in the final quarter of the year
  • According to PIRI, prime property in Monaco is the most expensive in the world. London and Manhattan are placed second and third

Liam Bailey, head of residential research at Knight Frank, comments:

“The latest figures from the unique Knight Frank Prime International Residential Index, which has just been launched in the 2009 Wealth Report, paint a gloomy picture for prime residential property prices around the world. Although a large number of locations did see values rise overall last year (please see attached spreadsheet), growth had either stalled or fallen in three-quarters of them by the end of the final quarter (Q4).

“It is now clear that not even the most desirable property around the world will remain immune to the global financial downturn. The fact that some locations did manage to show positive growth, even as much of the world slipped into recession, is more of a reflection that different regions are in different stages of the economic cycle, rather than any inherent ability to ride out the storm unscathed.

“Many south-east Asian economies were not hit as quickly by the credit crunch, which explains why cities such as Bangkok and Jakarta head our PIRI table for growth this year. But what is also apparent is that even markets that have seen spectacular growth can turn very quickly. In Dubai, for example, prices fells 19% in Q4, as investors pulled out of an over-supplied market.

“These latest PIRI results show that even the world’s richest people have reigned back their discretionary spending in light of the credit crunch and global recession. Despite this trend, the rich remain committed to property, according the results of our 2009 Wealth Report Attitudes Survey, and we believe the quality of the best prime locations will still continue to attract buyers and will recover the quickest. Those markets fuelled by speculators and investors may not, however, return to recent highs for many years.

“It is also worth noting that, even now, the wealthy are still prepared to pay significant amounts of money to buy property in the most exclusive locations. Monaco tops the PIRI top-10 most expensive city locations with prime property worth €50,000 or more per square metre at the end of last year.”

PIRI Top-10

 € per sq m

 $ per sq ft

Monaco

     50,000  

       6,550  

London

     28,000   

       3,670  

New York (Manhattan)

     16,500  

       2,160  

Moscow

     16,200  

       2,120  

Paris

     16,000  

       2,100  

Tokyo

     15,850  

       2,080  

Hong Kong

     15,750  

       2,070  

Rome

     13,500  

       1,770  

Singapore

     11,850  

       1,550  

Sydney

     11,000  

       1,440  

The latest Knight Frank PIRI results are launched in the 2009 Wealth Report, produced in conjunction with Citi Private Bank. As well as PIRI, the report also includes the following new research:

  • Knight Frank/Citi Private Bank HNWI Attitudes Survey
  • Knight Frank World Cities Survey
  • Knight Frank Global Farmland Survey

For further information, please contact:
Liam Bailey, head of residential research, Knight Frank, +44(0)20 7861 5133, +44 (0)7919 303148
liam.bailey@knightfrank.com

 

Ends

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 196 offices, in 38 countries, across six continents.  More than 6,770 professionals handle in excess of US$700 billion (almost £355 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.

The 2009 Wealth Report is the third collaboration between Knight Frank and Citi Private Bank, market leaders in high-value property consultancy and wealth management respectively. In the report our expertise in the property and financial sectors has been combined to provide insight into the wealthy and their relationship with the prime property sector.

The report provides a comprehensive analysis of the prime global residential markets. We look at the importance of residential property as an asset class and report on pricing trends across the global prime residential market and look forward, with the aid of market-leading thinkers and commentators, at the big trends set to impact on the property markets in the future.

The Knight Frank Prime International Residential Index (PIRI) is the only index that tracks prime residential property markets across the globe. Data is based on a selection of residential properties in prime market locations, which are valued on a structured basis, capturing changes in capital values, rents and yields.  A total of 55 locations are included in this year’s index.  All prices are captured in local currencies to remove the impact of currency change on our calculation and price growth.

The Knight Frank/Citi Private Bank Attitudes Survey is an online survey completed by a global cross-section of Citi Private Bank’s wealth managers representing around 2000 of the world’s richest people. Respondents are asked to consider the behaviour and attitudes of their clients in relation to investment activity, property ownership and philanthropy, both historically and in the future.

The Knight Frank World Cities Survey assesses 40 of the world’s leading major cities based on four criteria – economic activity, political power, knowledge and influence and quality of life –  to determine their overall position within the hierarchy of  global cities.

The Knight Frank Global Farmland Survey uses official indices, where available, to track the performance of farmland values across the world. Where no official statistics are available the most reliable local sources are used.
 

PDF version of the wealth report 2009