Dhe prices for luxury real estate are recovering again globally. The reason for this is the decreasing interest rate uncertainty. That emerges from a report of the real estate consulting firm Knight Frank. In the 46 cities covered by Knight Frank’s Prime Global Cities Index, the average annual price increase is 1.5 percent.
This means an improvement compared to the previous quarter, because in 57 percent of the cities surveyed, prices have risen over the past three months. Nevertheless, the price increase is still well below the peak of 10.2 percent in the last quarter of 2021.
The higher interest rates had led to a price downturn in the real estate markets. According to the real estate consultants, prices are rising again because many markets believed that interest rate uncertainty was over. In addition, mortgage rates have already started to fall in several countries.
Price increase of 225 percent since Corona
In no other city have real estate prices risen as sharply in the past twelve months as in Dubai, the report goes on to say. The city in the United Arab Emirates recorded a price increase of 48.8 percent, since the corona pandemic prices have risen by a total of 225 percent. This marks the eighth straight year that the city ranks first in Knight Frank’s Prime Global Cities Index. Tokyo is in second place with growth of 26.2 percent, followed by Manila in third place with 19.9 percent.
In the metropolis of Hong Kong, on the other hand, prices have fallen by 1.5 percent in the past twelve months. According to the experts, in addition to high interest rates, the recent increase in unsold, recently developed projects is pushing prices even further.
On the other hand, Singapore’s real estate market remained relatively stable during the corona pandemic with a price increase of 4.2 percent. Australia’s real estate market also initially experienced robust growth during the pandemic, but experienced a sharp decline in the second half of 2022. As the report goes on to say, however, prices have developed positively on an annual basis: the strong demand for real estate in Sydney and Melbourne has caused prices to rise.
Prices are falling despite high demand
Although more workers are moving back to New York and demand for high-quality real estate has not yet been satisfied, prices are still not rising, according to Knight Frank – they have even dropped 3.9 percent over the past 12 months. One of the reasons for this is high debt costs. In the United States there is a clear shift in demand from the western to the eastern regions, which, however, favors markets in Miami or Texas and not in New York.
According to the Prime Global Cities Index, property prices in London are also continuing to fall, having fallen by 0.5 percent in the past twelve months. However, demand remained consistently strong over the past year, and the number of potential buyers in London in July exceeded the five-year average by 24 percent. According to the advisors, this is not surprising given that the market is being supported by the relatively weak British pound. This and the return of travelers like before the Corona pandemic would benefit foreign buyers.
With a drop in real estate prices of 12.9 percent, Frankfurt occupies the penultimate place in the ranking of real estate consultants. Bringing up the rear is New Zealand’s capital, Wellington, with a price drop of 15.1 percent.
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