Billionaire markets as the super luxury housing markets are referred to have defied the economic downturn and grown at a quicker pace than the mainstream markets. This is the finding of Savills, a global real estate firm, in its annual World Cities Review report. The activity of the billionaires in the global real estate market has been intense, resulting in new records from purchases of trophy homes. Predictably the fastest and largest increases have been recorded by Asia in general and China in particular and we have seen the most expensive city for billionaire homes in the region. The last seven years have been a turbulent period for the world economy but the values of property in this sector has doubled in the same period.
Hong Kong Average Luxury Home Will Cost You $57 Million
Hong Kong has emerged as the city with the most expensive luxury real estate. The average price prevailing last year on the island, tabulated by Savills came to a staggering £7,200 per square foot, or nearly $11,000 per square foot. The rising commodity prices and the emergence of a new wealthy class has fuelled the price rise and created pressure on the limited supply of luxury property. Hong Kong’s most expensive property deal is held by a house on Deep Water Bay Road that fetched £8,200 or about $13,000 at the prevailing exchange rate per square foot in 2011. The average property size in the luxury segment in Hong Kong is 5,200 square feet which means that you require $57 million to buy an average luxury home in the city.
Tokyo is the Second Most Expensive City in the List
Tokyo has traditionally been the most expensive city for luxury travel and is still the second priciest place for high end homes. The average property price in the high end segment last year prevailed at£5,000 (or $7,600) per square foot. However the average size of a luxury home in Tokyo is much bigger at 16,000 square feet which means that an average luxury home in Tokyo would cost you in the region of $121 million. London has been in the news for some big ticket purchases in the recent past and is ranked third in the report with an average price of £3,500 (or about $5,300) per square foot. The average size of a luxury home in the city is 7,900 square feet which values it at $42 million.
Billionaires Looking at Properties as Income Producing Assets
The price increases in the last seven years have been the most dramatic in cities in the emerging markets like Singapore and Mumbai. They have recorded an increase in luxury property prices of 232% and 176% respectively. It is a remarkable record despite the fact that they both grew from relatively low base values. In Savills list of world’s most expensive cities for luxury real estate, Paris occupies the fourth place followed by Moscow and New York. Yolande Barnes, head of world research at Savills believes that there is a clear trend of increasing focus on urban locations. Their prediction for the current year is that the segment might witness a slowdown because of the hyper activity last year. There is a level of saturation in key cities and the focus might shift to new locations. The government policies in terms of restrictions on home loans and higher stamp duties have also been designed to curb the high end activity. Another significant finding of the report is that the billionaires are not buying high end property only as a long term investment but as a potential rental property that can turn them into income-producing assets.
Via: huffingtonpost, forbes
