Hugh Wade-Jones is director of Enness Private Clients
While our primary focus is prime property in London and the Home Counties, every now and then it is interesting to take a step back and compare the high net-worth landscape in the UK to that in other countries around the world.
One very simple way of doing this is by taking a look at Knight Frank’s excellent Prime Global Cities Index which gives a great indication of values and trends across different continents and helps place London’s performance in some sort of context. It is no secret that London’s prime property market has been going great guns in the past few years and will continue to thrive as money floods out of the eurozone but how is it faring against equivalent cities further afield?
The answer is pretty darn well. Of the 23 cities featured in the index, London has experienced the fourth highest annual increase (11.3%) in prime property values in the twelve months to March 2012. It is also Europe’s strongest performer and trails only Nairobi (24.2%), Jakarta (14.3%) and Miami (13.9%) in the global standings. This lofty fourth position places London just ahead of regular foe Manhattan and a few notches above its closest European rivals Moscow (5.7%) and Zurich (3%).
For those thinking that prime property is a fail-safe investment anywhere in the world, this assumption is challenged by the fact that less than half of the featured cities recorded an increase in values over the past year. Asian-Pacific cities dominate the basement, with Mumbai propping up the table (-9.1%) and Sydney (-9%) and Kuala Lumpur (-8.8%) only faring marginally better.
Sydney in particular has experienced astronomical price growth over the past years, so it is perhaps unsurprising that the rate of rising values there has tailed off somewhat. Playboy’s playground Monaco finds itself in the lower echelons of the index having witnessed a 7.7% depreciation in values and is accompanied in the bottom half by near neighbours Paris (-4.5%), Madrid (-4.3%) and Geneva (-5%).
Such a strong showing in a global survey just goes to show how well London’s high-end market is performing. The report author even suggests that the recently imposed stamp duty increase on properties valued at over £2m has made minimal impact on the demand for such abodes which is welcome news to those who feared that the government’s heavy-handedness would push the prime property boom off course.
London’s 11.3% annual increase is all the more impressive against the backdrop of the European average standing at -3.4%, showing just how far ahead of the curve London is. Any fears of a bubble can be easily dismissed too, with the market underpinned by a sufficient level of demand that any drop-off in the near future seems unthinkable.
It has been widely reported that enquiries from Spanish, Greek and Italian buyers has surged as economic uncertainty prevails in such nations and, with results like those recorded in this index, it is not hard to see why London continues to be regarded as a safe haven for overseas investors.