The evolution of prime property pricing across global cities

How relative average and top prices in ten global cities have changed over the past five years

Words: Flora Harley, Senior Analyst, Knight Frank Research

At a glance

 

We have reviewed market data across ten cities, from London to Sydney and from Dubai to Miami. We not only compare the average price per sq ft and per sq m on a city-by-city basis, but also present the highest price achieved in each market.

  1. Hong Kong, perhaps unsurprisingly, is the most expensive market that we look at, with an average prime price of US$4,251 per sq ft (US$45,760 per sq m) in 2018
  2. New York and London remain the dominant ultraprime markets, tussling for second and third place in our rankings
  3. Dubai remains the most affordable market with an average price of $625 per sq ft (US$6,729 per sq m), just 15% of the average price in Hong Kong, it has nevertheless seen some of the highest premiums
  4. Singapore has seen its highest achieved price remain relatively stable year-onyear, while the average prime price has appreciated by 17% between 2014 and 2018
  5. Across the ten cities surveyed, the differential between the average and top price achieved is just under 200%
  6. Over the last five years the gap has been largest in Hong Kong, a difference of 624% in 2016
The full read

To establish a clear picture of how prime pricing has moved in the last five years, we have reviewed market data across ten cities, from London to Sydney and from Dubai to Miami.

We not only compare the average price per sq ft and per sq m on a city-by-city basis, but also present the highest price achieved in each market. Hong Kong, perhaps unsurprisingly, is the most expensive market that we look at, with an average prime price of US$4,251 per sq ft (US$45,760 per sq m) in 2018.

However, analysis over a five-year period shows that the top price achieved was in 2016 at US$28,154 per sq ft (US$303,051 per sq m).

New York and London remain the dominant ultra-prime markets, tussling for second and third place in our rankings. In 2011, we predicted that prices above£10,000 per sq ft (US$137,102 per sq m) would be achieved in London this decade.

This benchmark was exceeded with a price above £11,000 per sq ft (over US$163,000 per sq m) in 2017, the second highest level of all our locations that year.

PRIME PRICING - THE AVERAGE PRIME PROPERTY PRICE AND TOP PRICE ACHIEVED 2014–18, US$ PER SQ FT (US$ PER SQ M)*

Sources: Knight Frank Research, Douglas Elliman, ZIEGERT Research, HM Land Registry, LonRes, Databien, Memfus Wong Property Information Centre, REALIS
*Exchange rates calculated as at 31 December 2018 **Manhattan only

As is the case for many locations, new-build developments are helping to raise the bar in terms of prices achieved. While relatively speaking Dubai remains the most affordable market with an average price of US$625 per sq f (US$6,729 per sq m), just 15% of the average price in Hong Kong, it has nevertheless seen some of the highest premiums.

In 2014 one sale achieved US$3,976 per sq ft (US$42,796 per sq m), the fourth highest in any of our city markets that year.

In many locations, the highest achieved price corresponds with the market overall reaching its peak. For example, Paris and Berlin have seen consistent growth since 2014, recording their highest prices yet in 2018.

However, there are exceptions to this rule. In London, for example, the average prime price fell by 7% between 2015 and 2017, yet a record US$15,184 per sq ft (US$163,440 per sq m) was achieved in 2017. Singapore has seen its highest achieved price remain relatively stable year-onyear, while the average prime price has appreciated by 17% between 2014 and 2018.

PREMIUM PRICES % DIFFERENTIAL FOR TOP PRICE VS AVERAGE PRICE IN THE PRIME SEGMENT, 2014-18

Sources: Knight Frank Research, Douglas Elliman, ZIEGERT Research, HM Land Registry, LonRes, Databien, Memfus Wong Property Information Centre, REALIS Note: Figures are based on publicly available data and may not reflect all sales in each market **Manhattan only

While the majority of the markets we cover in this section see the highest achieved price move in tandem with the average, there are some where there is convergence and others with outliers, as shown in the figures on pages 4 and 5.

Across the ten cities surveyed, the differential between the average and top price achieved is just under 200%. Over the last five years the gap has been largest in Hong Kong, a difference of 624% in 2016. However, uplifts of a similar magnitude were echoed in Dubai in 2014 and Miami in 2015.

The uplift is lowest in Paris and Singapore, with five-year averages of 30% and 39% respectively. This may reflect the fact that these cities sit in the middle of the price spectrum while the most dramatic uplifts are typically seen at the far ends, i.e. in those cities with the lowest or highest prices.

In addition, as many Singaporeans live in public housing the market for private homes is smaller, and with lower levels of demand come fewer high premiums.