Top 10 international property destinations named

Ten world cities are virtually immune to the vagaries of the global financial crisis and have more in common with each other than the national markets in their home countries, according to international property agent Savills.

Savills today launched its new World Class index of global residential property locations. Average values across the index have risen by 77% since December 2005, despite the financial crisis, with growth of 6% in the first six months of 2011.

The average price increases hide a disparity between the performance of cities in emerging markets and those in established ones. The property markets in Tokyo, London, Paris, Sydney and New York grew by 32% on average in the period since 2005 while the prices in Shanghai, Singapore, Hong Kong, Moscow and Mumbai grew by an average of 123% over the same period.
The world's most expensive markets

The most expensive city in the index is Hong Kong remains where values are 107% above the index average, and 63% more expensive than second place London, which is grouped alongside Tokyo, Singapore and Paris.

The least expensive market is Mumbai which costs 43% less than the average but recorded the highest growth rate (154%), marginally ahead of Shanghai's (143%).

Safety for the rich

Capital growth in the ten cities is being driven by both domestic and international demand. It is arguably the latter that makes these cities so different to most other markets. The super rich see centrally-located real estate as one of the best methods of preserving wealth in a highly uncertain and inflationary environment. Both old money and the new wealth being created in the east is migrating to these cities with the relatively open markets of London and Paris being the favoured destinations for those who can afford it.

There is also a strong element of speculation exaggerating the effect as speculators jump on the band wagon expecting a "one way bet" in these markets.

The big question is whether speculation will cause these markets to overheat and correct? It is more likely in the emerging world where prices have risen so rapidly but over a ten year time horizon it is difficult to see prime real estate in any of these cities being a bad investment.

Agents working in super prime destinations will continue to be immune to the vagaries of the down turn while the mass market continues the rollercoaster ride.

Source: Global edge