The value of prime real estate in New York, London, Hong Kong and Singapore is set to rise by 27% in the next five years, due to the growing number of ultra-high net worth individuals globally, according to recent research.
The Global Prime Sector Report – published by property developers Candy & Candy, Deutsche Bank and estate agent Savills – found that by 2017 the UHNW population was expected to increased by 20%, with their collective wealth increasing by 30% as international markets recover.
The "big four" have built reputations as key financial hubs and Nick Candy, chief executive of Candy & Candy, said: "A trophy 'safe haven' property in a global city is typically at the top of the shopping list for wealthy individuals."
Across the four cities in 2012, there were more than 300 deals in the ultra-prime sector – property worth £10 million (€11.9 million) or more – with a combined worth of £6.6 billion, according to the research. By 2017, the number of prime real estate transactions is expected to increase to 400 per year, with a total value of £8.4 billion.
Yolande Barnes, director of Savills World Research, said: "It would take a pretty calamitous shift for these cities to be knocked out of the top four, but then again 20 years ago Tokyo would have probably have been in this group – 20 years of economic problems has had an impact."
She added: "There are always risks, Hong Kong's biggest risk is China, if China starts lifting currency regulation – a lot of mainland wealth is channelled through Hong Kong. Singapore on the other hand, there is not much that would oust Singapore. It is very cosmopolitan, probably the most cosmopolitan after London and it bridges both east and west, both India and the rest of Asia, whereas Hong Kong looks towards China."
In London, the report found that international buyers had made 70% of the prime real estate deals in the last year. "London is extraordinarily cosmopolitan and welcoming, you can see the purchase of a mansion in Mayfair like setting up a global head quarters rather than just a residential property, it is a base to do business – you can get a lot done in London," Barnes reckoned.
Only New York was sometimes punching below its weight in Barnes' opinion. The dominance of cooperatives in the property market means potential buyers are required to disclose a lot of financial information – something UHNW individuals are often reluctant to do. She reckoned that west coast cities such as San Francisco or Los Angeles could possibly see an influx of the super wealthy in the future.
She added: "We won’t see the rate of ultra-prime house price growth abating significantly over the long term. It will be driven by the rarity value and desirability of homes in established world cities.”