Dubai: Dubai and Abu Dhabi easily made it to the top 10 rankings of global cities where the world’s wealthy acquired luxury property in 2013. They came in seventh and eight respectively in a list that saw Jakarta, the Indonesian capital, at the top of the hustings, according to the just released Prime International Residential Index (PIRI) put together by the consultancy Knight Frank.
Dubai’s premium realty recorded a 17 per cent growth in 2013 on top of the 20 per cent gain in 2012, which was when global investors started renewing their fund flow back into the emirate’s real estate. Abu Dhabi’s were up 15 per cent in 2013.
“Inevitable debates have ensued as to whether Dubai and Dublin [which was in fifth spot with a 17.5 per cent year-on-year gain] are on the cusp of another bubble,” said Kate Everett-Allen, head of the PIRI analysis at Knight Frank. “However, in both cases, average prices have yet to approach, let alone exceed, their pre-crisis highs.
“Cash buyers are driving sales and regulation is tighter with some purchase and ownership costs higher than in 2008. This follows Ireland’s introduction of a new local property tax in 2013 and transfer costs in Dubai doubling to 4 per cent during 2013.”
It could also be that most of the immediately available stock of luxury properties are already with buyers, who may now be taking a breather on when to sell them on. Also, there is feedback from the market that too high an asking price on units is putting off buyers.
Go-to destinations
Jakarta and Auckland came up tops as the wealthy property investors’ favoured go-to destination, with year-on-year gains of 37.7 per cent and 28.8 per cent respectively. Bali, another Indonesian destination, came in third, and followed by Christchurch, Dublin and Beijing.
Guangzhou and Los Angeles were at ninth and 10th spots.
“China, as always, has been difficult to predict, with the market continuing to defy expectations and several rounds of cooling measures,” said Nicholas Holt, Knight Frank’s head of Asia-Pacific Research. “The reality is that in such an equity-driven market, the Tier 1 cities are likely to see both demand and pricing continue to head higher.”
After a stutter in 2012, prices in Beijing were up 17 per cent, while Guangzhou rose 14 per cent.
There is good news for European destinations, with Madrid clearly back in favour after a few tumultuous years. Prices in the Spanish city shot up 5 per cent, while in Germany, Munich’s gains in the 10 per cent range and “emblematic of the surge in pricing in prime German city markets,” the report said. “This is partly being led by safe haven flows from investors in less secure Eurozone countries looking to insure against the possibility of a collapse in the euro.”
