Investors Shift Priorities to Pursue Fastest Growing Real Estate Opportunities

 

Real estate in Singapore, Madrid, and Tokyo has increased in price by more than 10% and demand keeps rising. In the meantime, prices for real estate in Dubai and London are tumbling as demand slips. The EU and, in particular, German luxury real estate markets remain the most stable. In 2018, Berlin real estate enjoyed the highest demand. 

The geography of luxury real estate investment is changing, analysts at the International Luxury Property Expo (ILPE) report. Investors’ focus has shifted toward countries that have seen an increase in real estate value over recent years.

For instance, prices for high-end real estate in Singapore have soared by 11.5%, while in Tokyo prices have risen by 9.4% and in Beijing, real estate values have risen by 7.3%. At IELPE events in 2018, many attendees expressed interest in Spanish properties, which mirror the current trends.

As another example, prices have skyrocketed by 10.3% in Madrid. Germany remains the most attractive destination in Europe for upmarket real estate investment. Its popularity can be credited to its stable economy and a transparent taxation system. The German real estate market received €57.5 billion in investment over the previous year alone. Based on the number of inquiries, real estate in Germany ranked first among the EU countries at IELPE events.  

In general, the European Union retains its investment appeal for upscale property investors, but 2017 was not an easy year, where concerns included Brexit and elections in Germany and France. Even so, 2018 had a positive effect on the real estate market which, in turn, resulted in an increase in luxury real estate prices. In Berlin, prices rose by 8.5% and by 6% in Paris. The most expensive homes can now be found in Monaco, where homes fetch US$62,500 per square meter. On average, prices for high-end real estate in the EU have grown by 6%. Western Europe remains the most coveted investment destination for asset protection. 

Political uncertainty has taken its toll on real estate elsewhere: In London prices declined by 1.8%, and in Istanbul by 2.4%, while the market in Vancouver, Canada has plummeted, losing 6.2% of its value. 

Several years ago, investors massively favored the UAE, but now, with prices dropping an average 6% a year, investors need to use caution when selecting a property. However, the transaction volume still remains quite high and the market is expected to recover and prices to rise by 2020, thanks to Dubai’s playing host to the 2020 World Expo.

Forecast for 2019

ILPE analysts report the following trends influencing the luxury home market in 2019: 

• Investor interest in upmarket holiday rental apartments is growing. This holds true for Europe (e.g. Italy and Spain) and Asia (Thailand).
• Caution in transactions involving UK real estate in the aftermath of the Brexit vote, to be observed during the first half of 2019.   
• Europe is gradually withdrawing capital from the market while investments from Asia and CIS countries, particularly China, Hong Kong, India, Russia, and Azerbaijan, are rising steadily.
• The number of deals involving off-plan and pre-construction properties is increasing. 

Background information:

International Luxury Property Expo (ILPE) is a series of B2C exhibitions dedicated to high-end real estate that have been held around the world, including in Cannes, Shanghai, Mumbai, Moscow, Bangkok, and other cities. The ILPE events draw HNWIs from across the globe. 

The large-scale Monaco International Luxury Property Expo 2019 will be held 15-16 May in Monaco’s Grimaldi Forum. It will bring together 200 developers and 1,000 individual investors from 80 countries.  

The ILPE team works with private investors directly and eyes the real estate market worldwide.

The above figures were provided by the ILPE analytical services. 

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