Luxury real estate prices around the world are rising at their fastest rate since 2017 — and Asian cities are leading the charge
- Luxury real estate prices are on the rise, according to a new Knight Frank report.
- Five of the ten cities recording the highest luxury real-estate price growth are in Asia.
- The Chinese cities of Shenzhen, Shanghai, and Guangzhou took the top three spots.
- See more stories on Insider’s business page.
Luxury real-estate prices are on the rise, particularly in Asia.
A new report released by global property consultancy Knight Frank found that the price of prime real-estate — or the top 5% of the market value-wise — rose by an average of 4.6% in the first quarter of 2021. That marks the biggest quarterly increase since Q4 2017.
Three Chinese cities led the ranking: Shenzhen registered a 19% price increase year over year, while Shanghai and Guangzhou each registered 16% price increases in the same time frame. Seoul came in No. 5 on the ranking with a 14% change.
“Despite the introduction of stricter curbs on China new home sales in January 2021, buyers’ enthusiasm continues to persist as the low inventory stoked a fear of missing out among homebuyers,” Victoria Garrett, head of APAC residential for Knight Frank, said in a press release.
The only non-Asian city to rank among the top five cities is Vancouver (No. 4 on the ranking), where prime real-estate prices increased by 15% year over year. The highest price change among American cities was in Los Angeles (No. 8), where prices rose by 12.6% from Q1 2020 to Q1 2021.
Other cities saw prices soften in this same time frame, according to the report. Notably, New York, Hong Kong, and London each saw a dip in their prime real estate prices. Among the 46 global cities tracked by Knight Frank, New York City saw the biggest price dip: Prices fell by 5.8% year over year.
From fishing village to unaffordable metropolis
Thirty years ago, Shenzhen was a fishing village.
Now a city of 12.5 million people, the city attracts young talent and is sometimes called the “Silicon Valley of Asia.” The average age of the city’s residents, according to a report from Nikkei Asia, is 32, and people in their 50s and 60s are “rarely seen.”
Tech giants including Tencent, Huawei, and ByteDance are all based in the city.
The city borders Hong Kong, which has long reigned as the world’s most expensive city to rent a luxury apartment. Its proximity to Hong Kong — the cities are a 15-minute bullet-train-ride apart — has led some property developers to eye Shenzhen as a more affordable housing counterpart.
But as Bloomberg CityLab reported in December, the city is facing down its own real estate problems: It has China’s highest real-estate prices and lowest homeownership rates. The cost of an apartment in Shenzhen, per Bloomberg, is 43.5 times a resident’s average annual income.
Shanghai, meanwhile, was recently named the most expensive city in the world for the ultra-rich in Julius Baer’s 2021 wealth and lifestyle report. The cost of housing in the city is 36.1 times higher than a resident’s average annual income, per Bloomberg. And in the Economist’s 2020 Worldwide Cost of Living Report, which was released in December and which considers housing among 200 factors in establishing its results, Guangzhou, Shanghai and Shenzhen all ranked among the world’s cities with the highest cost of living.
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