Top Luxury Real Estate Investment Safe Havens: Singapore, Sydney, and Hong Kong
By: Dean Woodford
Tags: Real Estate Investments

According to Knight Frank’s freshly released 2012 Global Development Review Report, global economic instability since 2008 has resulted in starkly divergent responses from luxury developers around the world today. عيد الفطر

According to Knight Frank’s research on luxury residential development in 14 important areas around the world, non-domestic investors accounted for 50 percent to 60 percent of demand for newly-built property in London and Europe in 2011.

Before the credit crunch, the worldwide prime development story was fairly consistent: rising development volumes were met by rising demand and price increase.

Following 2008, global luxury development volumes plummeted, but steadily began to climb as economic confidence recovered.

This straightforward narrative conceals certain key shifts that have shifted the global development market’s form in recent years.

Emerging locales, dubbed the “next great thing” in the late 2000s, have been the principal victims of the recent economic turbulence.

There was a ‘flight to safety’ in 2008 as the market constricted, with purchasers increasingly focusing on established’safe-haven’ regions.

Even after the market began to recover after 2009, these established markets continued to attract the majority of development and investment.

As a result, cities like New York, Paris, London, Monaco, Hong Kong, and Singapore have grown in popularity, while lesser-known key markets in the Middle East, Europe, and North America have failed.

Indeed, as the global financial crisis intensified in 2011, the construction of a two-tier market in this regard grew, with flight capital pouring from problematic parts of the eurozone and investors from the Middle East and North Africa seeking to invest in London, Paris, the South of France, and New York.

Global investors looking for a safe haven for their money have flocked to Asia’s developing markets, which include Singapore, Sydney, and Hong Kong.

Liam Bailey, the Head of Residential Research at Knight Frank, tells the World Property Channel, “Prior to the credit crunch, global prime development was steady; rising development volumes were met by rising demand and concomitant growth. Following the financial crisis of 2008, global luxury development volumes plummeted, but have recently begun to steadily recover as confidence returns. Emerging markets, which were billed as “the next great thing” in the late 2000s, have been the principal victims of the recent economic upheaval.”

Bailey goes on to say, “Buyers increasingly sought on known “safe haven” locations as the market “contracted” in 2008. When the markets started to recover in 2009, these were the places that remained popular and saw the most investment and activity. As a result, cities such as New York, London, Paris, Monaco, Hong Kong, and Singapore have grown in popularity, whereas less developed prime markets in the Middle East, Europe, and North America have struggled.”

Key Takeaways:

The availability of development financing is a problem in both the West and Asia, but particularly in Europe and the United States.

Bank funding continues to dominate most global development centers, accounting for over 75% of all development money.

While construction and completion volumes have increased in Asia-Pacific, they have decreased in Europe and the United States.

Luxury residences in the world’s most desirable cities will retain their safe-haven status, but they will attract fewer speculative speculators looking for a quick profit.

Investors looking for a safe haven for their money have flocked to Singapore, Sydney, and Hong Kong’s development markets.

In 2011, Mumbai had the highest number of residential completions.