Despite an expected decline in prices for luxury housing in 2016, Monaco remains an attractive holiday destination and country of residence for wealthy families from around the world.
According to the latest research by Knight Frank Prime, a London real estate agency, a decline from 3% to 1.7% is expected in elite real estate prices in 2016. The researchers think that the reason of this decline is a slowdown in China’s economic growth and in emerging real estate markets.
Knight Frank classes elite housing as 5% of the most expensive apartments in a city.
“We are on the brink of a new situation in China, where no such wealth will be created as in earlier years,” – says Liam Bailey, Head of Knight Frank research center.
The economic slowdown in China is due to affect not only the local residential property market, but also that of neighboring Asian countries where wealthy Chinese families tend to buy expensive housing. In Shanghai, the growth of house prices thus would halve from 10% in 2015, to 4% in 2016. Hong Kong prices are projected to fall by 5%, plummeting the performance of a major economic center in China. China is followed by Singapore, with a 3.3% price drop.
The current leader in luxury real estate markets – Sydney – will however stay at the top of the ranking in 2016, despite an impressive number of buyers from China. This year, the elite real estate prices in the Australian cultural capital will rise by 10%, although 5% less compared to the previous year.
With Sydney still showing the fastest price increase rate, as reported by Mr. Bailey, the demand for real estate among Australian consumers stays high. And while China’s economic slowdown negatively impacts the country’s wealth, it has no effect on the purchasing power of Chinese people abroad.
“Now we are witnessing the following situation: the greater the sense of economic instability in China, the greater the will of its wealthy and middle class citizens to invest their money outside the country. This is contrary to common sense, but the main demand of Chinese buyers accounts for overseas property,” said Mr. Bailey.
The economic situation in China has a positive impact not only on Australia, but also on the US. The prices of New York property will thus grow by 5%, while Miami will show a slight increase of 2%. High real estate prices in London and more severe taxation policy have a positive effect on the United States. “Clients who before were looking for a house in London, would now consider real estate in New York, Los Angeles and Miami,” said Bailey.
But this favorable situation on the market is subject to a rising dollar, making the US real estate more expensive for foreign buyers. Among European real estate markets, which will stay slow in 2016, Monaco is the only place with a 5% increase in prices. As stated in the study, Monaco is still an attractive holiday destination and country of residence for many wealthy families from around the world.