LONDON INCREASES ITS LEAD IN LUXURY PADS
LONDON INCREASES ITS LEAD IN LUXURY PADS
By Daniel Thomas, Property Correspondent
Tuesday, April 22, 2008
The
rich are getting richer, propelling a big rise in the cost of luxury homes in the capital that contrasts starkly with falling house prices elsewhere in the market.
According to today's 2008 wealth report from Citi Private Bank and Knight Frank, London is the most expensive city in the world to buy luxury residential property. Price growth last year easily outpaced that of rivals such as Monaco.
With the ranks of dollar millionaires across the world swelling by more than 300,000 in 2007, more cash than ever is being lavished on super-luxury properties. Such homes are equipped with the latest gadgets and ultra-tight security.
Although more luxury residential properties are coming on to the market from specialist developers such as the Candy brothers, prices in London barely slowed last year.
The average price of a luxury pad in London rose 29 per cent to €46,000 (£36,500) per square metre in 2007, the report says.
The number of £10m-plus sales in Chelsea, Knightsbridge and Belgravia in the six months to January 2008 was 190 per cent higher than in the same period a year earlier.
Surrey, Buckinghamshire, Hampshire and Berkshire are now among the top 35 most expensive property areas in the world.
The fact that these rub shoulders with more exotic locations such as the C?te d'Azur, Milan and Barbados attests to the strength of the bull run in house prices in the UK during the past decade.
The average increase in capital values of prime property globally was 11 per cent in 2007.
But the report says price growth for high-end residential property around the world has slowed and it records a drop in price in certain prime locations.
In Dublinprices of luxury property dropped by 15 per cent in 2007. There were also falls in Ibiza and in prime US locations such as Palm Beach, Florida, and San Diego, California.
The US was generally more subdued than elsewhere in the world.
One of the authors of the report, Liam Bailey of Knight Frank, warned that the good times could be coming to an end for the high-end property markets, in the short term at least.
“There has been a slowdown coming and we now expect prices to begin to fall in the UK, US and beyond following the boom in prime properties in the developed world over the past few years,” Mr Bailey said.
There had been little real impact on prices in global cities yet, however, and property remained a sound investment for the longer term, he said.
The nearest city to London in terms of price last year was Monaco, where values reached €43,750/sq m, and France's St-Jean-Cap-Ferrat, which saw one of the highest increases in price of 39 per cent to €43,490/sq m.
In these three areas, €1m would buy a small top-end studio flat – the same cost as a five-bedroom mansion in cities in China such as Guangzhou and Shanghai.
But it is in these emerging market cities that some of the strongest growth in house prices is taking place. Prime house prices in Guangzhou rose 28 per cent during the period.
St Petersburg and Moscow, where the rate of growth in 2007 was 38 per cent and 35 per cent respectively, benefited from a combination of increasing affluence and a lack of supply.
