The Best Places to Invest in Luxury Real Estate.
According to Knight Frank's newly published 2012 Global Development Review Report, global economic instability since 2008 has resulted in sharply different responses from luxury developers around the world today. qatar property
According to Knight Frank's reports on luxury residential construction in 14 main locations around the world, non-domestic buyers accounted for 50 percent to 60 percent of demand for newly-built property in London and Europe in 2011.
Before the credit crunch, the global prime development narrative was reasonably consistent: growing development volumes were met by rising demand and price growth.
Following 2008, global luxury production volumes plummeted, but steadily started to grow as economic optimism returned.
This straightforward narrative conceals several important factors that have shifted the global development market's shape in recent years.
Emerging locations, dubbed the "next big thing" in the late 2000s, have been the key victims of the recent economic turmoil.
There was a 'race to safety' in 2008 as the market contracted, with buyers increasingly focusing on established'safe-haven' locations.
Even after the economy began to recover after 2009, these existing markets continued to attract the majority of development and investment.
As a result, cities like New York, Paris, London, Monaco, Hong Kong, and Singapore have grown in popularity, while lesser-known prime markets in the Middle East, Europe, and North America have suffered.
Indeed, as the global debt crisis escalated in 2011, the emergence of a two-tier market in this regard grew, with flight capital flowing from distressed sections of the eurozone and investors from the Middle East and North Africa seeking to invest in London, Paris, the South of France, and New York.
Global investors searching for a safe haven for their capital have flocked to Asia's development markets, which include Singapore, Sydney, and Hong Kong.
Liam Bailey, the Head of Residential Research at Knight Frank, tells the World Property Channel, "Prior to the credit crunch, global prime development was consistent; growing development volumes were met by rising demand and concurrent growth. Following the financial crisis of 2008, global luxury production rates plummeted, but have since started to steadily recover as optimism returns. Emerging markets, which were tipped as "the next big thing" in the late 2000s, have been the key victims of the recent economic turmoil."
Bailey goes on to say, "Buyers increasingly concentrated on existing "safe haven" locations as the market "contracted" in 2008. When the markets started to recover in 2009, these were the places that remained famous and saw the most investment and activity. As a result, cities such as New York, London, Paris, Monaco, Hong Kong, and Singapore have grown in popularity, while less developed prime markets in the Middle East, Europe, and North America have struggled."
Key Takeaways:
The availability of development funding remains a problem in both the West and Asia, but especially in Europe and the United States.
Bank financing continues to dominate most global development centers, accounting for about 75% of all development finance.
Although construction and completion volumes have increased in Asia-Pacific, they have decreased in Europe and the United States.
Luxury homes in the world's most desirable cities will maintain their safe-haven status, but they will draw less speculative investors looking for a quick profit.
Investors searching for a safe haven for their capital have flocked to Singapore, Sydney, and Hong Kong's development markets.
In 2011, Mumbai had the largest number of residential completions.