Real Estate Investor Magazine South Africa December 14/ January 15 | Page 55

REI OFFSHORE
REI offshore

Luxury homes in key global cities see a
slowdown in price growth

K

night Frank’s ‘Prime Global Cities Index’, which tracks the movement of luxury
residential prices across 33 cities, rose by only 0.2% in the third quarter of 2014, its
weakest performance in two years.
This moderate level of price growth is partly attributable to the fact that the third
quarter, for much of the world, is dominated by the summer holiday season which often
sees slower sales activity reducing the pressure on prices.
Key events on the political and economic stage are also likely to have been contributory
factors; the prospect of tightening monetary policy in the US, the approaching General
Election in the UK (including on-going discussions of a Mansion Tax), the persistence of
cooling measures in key Asian cities and perhaps most pivotal, a new set of negative
economic indicators emanating from Europe.
Although Jakarta tops the rankings, with prices rising 27% in the year to June (latest
data), the city has seen a sharp deceleration in prices, rising by only 2.5% in the first half
of 2014.
In Dubai, the rate of luxury price growth has declined. This is in part due to temporary
factors such as Ramadan which led to weaker buyer activity but also due to the UAE Central
Bank’s mortgage cap which is stricter for those purchasing properties above the United
Emirates Dirham (AED) 5 million.
Analysing the data on a quarterly basis, Tokyo and Cape Town were the strongest
performers with prices ending the three month period 9.2% and 6.3% higher respectively.
In terms of the US cities, all four included in our index are positioned in the top ten
rankings for annual price growth. The disparity with Europe’s cities is stark. Luxury prices
rose by 10.5% on average across North American cities over a 12-month period compared
with an average of only 1% across European cities.
This quarter marks the inclusion of Seoul for the first time in our index. Since reaching
their low in 2013, luxury residential prices in the South Korean capital are continuing their
recovery, rising by 4.1% in the year to September.
Scott Picken
Founder and Chairman
International Property Solutions (IPS)
Wealth Migrate is successfully using WealthMigrate.com - their online
crowdfunding portal - to create considerable wealth in real estate through
crowdfunding. They’re making property accessible through collective global
buying, and the numbers in the US and elsewhere are climbing, as investors take
note of this new way of real estate investing. Wealth Migrate has become the
Global Real Estate Marketplace™.
Dr Andrew Golding
Chief Executive Officer
Pam Golding Property Group

In the wake of the global financial crisis, attempts by major central banks
to revive their economies with ultra-low interest rates have fuelled a healthy
recovery in global property markets. However, just as the performances of
global economic recoveries differ widely in the post-crisis environment, so too
do the performances of the various housing markets. House prices have seen a
healthy rebound in America, Canada and Britain. However, weak spots remain,
particularly in Europe – with prices continuing to plunge in countries like Spain
and Italy.

www.reimag.co.za

GLOBAL QUARTERLY FUND RETURNS
ACCELERATE
The recent IPD Global Property Fund Index,
measuring fund-level real estate performance
across global markets, revealed that the
global quarterly fund return accelerated in the
quarter to June 2014, reaching 2.9%, a level
not seen since March 2011. This bought the
12-month return to 11.4% outperforming bonds
but logging equities and real estate equities.
The strong performance was driven
by Europe, which showed a substantial
acceleration compared with the previous
quarter. The UK market return rose to 4.1% as
at June 2014, up from 3.1% in March, while
continental Europe returned 3.2% in June
compared with 1.8% in March. Asia and North
America delivered more moderate growth
but both regained momentum after a slight
slowdown in Q1.
Mark Clacy-Jones, Vice President at MSCI,
commented: “Capital appreciation is now
dominating asset returns in the UK and
North America, which both recorded doubledigit performance over the last 12 months.
And although income return is still the main
driver of returns in Asia Pacific and Continental
Europe, it should be noted that capital growth
in Continental Europe reached 0.4% for the
quarter. This is its highest level since the index
started in 2008 and marks a return to positive
territory for the first time since March 2011.”
Industrials remained the stand-out sector,
which outperformed on a quarterly and annual
basis, while retail and residential lagged
significantly over these time frames.
December 14 / January 15 SA Real Estate Investor

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