Madrid has emerged as one of the top-performing prime property destinations in the world.
The Spanish city rose to fourth place in the Knight Frank
Prime Global Cities Index, Quarter 3 2017, with an annual increase in luxury real estate values of 11.9%. A year ago, Madrid was in 25th place.
Kate Everett-Allen, International Residential Research at the international property specialist, says, “Attracting strong interest from Latin America, in particular Venezuela, alongside the delivery of high-specification new developments, the city’s luxury residential stock is now firmly on the radar of global investors.”
Two other European cities appeared in the top 10 – Paris (11.3%) and Berlin (7.3%) “With typical prime prices averaging €18,000 per square metre and €12,000 per square metre respectively, buyers – both domestic and international – are now recognising the comparative value in such markets whether looking for an investment or second home,” explains Ms Everett-Allen.
Other European cities in the index - Zurich, Vienna, Geneva and London - all saw prime property values fall over the 12-month period.
Average prices in prime central London were down 4.6% in the year to September, although this is the most modest decline in nearly a year.
Altogether, the Prime Global Cities Index, which tracks the movement of luxury residential prices across 41 cities around the world, climbed 4.2% in the year to September 2017. A year before, the index rose 3.8% annually.
Top of the index is Guangzhou, China, where luxury property prices have risen 36.3% in the last year, but have slowed of late to 6.8% over the last three months.
Second is Shanghai, China, some way back with an annual rise of 14.9% and third is Cape Town, South Africa, on 14.5%.
Cities in Asia Pacific account for five of the top ten rankings, with Seoul (11.2%), Sydney (11.0%) and Melbourne (10.4%) joining Guangzhou and Shanghai.
Seoul’s rate of annual growth has slowed following market cooling measures announced this year, including tighter mortgage lending rules and higher capital gains tax for owners of multiple homes.
Long-term frontrunner, Cape Town lies between Table Mountain and the Atlantic, and limited new supply opportunities are helping to support prices.
United States cities remain firmly mid-table, headed by San Francisco (5.5%). A steady economy and a weaker dollar, compared with 12 months ago, is helping to support demand and prices.
In Canada, Toronto has slipped down the rankings, from second place last quarter, to fifth with a slowdown in annual growth from 20.7% to 11.5%. The new 15% foreign buyer tax, introduced in April, along with Canada’s two interest rate rises this year has hit buyer sentiment.
Australasia (10.7%) is the strongest-performing world region on average, with Russia & the CIS the weakest (-8.4%).