PRIME INTERNATIONAL PROPERTIES STILL BUCK THE DOWNWARD TREND – AND ATTRACT HNWI BUYERS

Two very obvious conclusions that can be drawn from the latest edition of The Wealth Report published annually by Knight Frank, the UK based property marketers and administrators, are, firstly, that prime position, upper-end properties have resisted remarkably well the global downturn in property values – and, secondly, South African top end property prices are still way below those of the international market.

Pointing this out, Lanice Steward, MD of Anne Porter Knight Frank, Knight Frank’s SA partner, quoted the report’s summary, which reads,

“In prime central London prices rose by 29% in the year ending December 2007 – but prices of properties valued above £10 million in the same period rose by more than 37%.”

Similarly, the report goes on to say, “whereas prices in the US fell by 4,5% over the past year, and by 4,2% in New York, generally (and are still falling) prices for prime Manhattan properties rose by 25% in the year to December, with properties priced at more than €10 million rising by close to 30%”.

Nick Candy, a prominent London developer, is quoted in the report say saying that “… If you buy quality, you will have still made the best long-term investment possible”.  (His company recently paid £959 million for a central city residential site.)

Just how inexpensive SA prime property is in comparison with the leading property performers worldwide is revealed by a table of square metre prices in 35 top areas:  London, Monaco, St Jean Cap Ferrat and Courchevel (in France), Manhattan (New York) and Cortina (Italy) lead the list with from €22 500 to €46 000 per square metre.  By comparison top Clifton and V & A Waterfront prices (which have recently hit all-time highs) are still only €6 000 to €8 000 per square metre – and most South Africans would regard these prices as now way over the top.

To what can the very high international prices be ascribed?  Here, too, the Knight Frank report gives some insights, saying that in the last year the number of HNWIs (High Net Worth Individuals) has increased significantly worldwide with the biggest rises in China (14%) and India (9%).  In the UK and Japan the number of HNWIs now exceeds 20 000.  The USA is, however, still way ahead of the pack with 460 dollar billionaires. 

HNWIs, says Steward, tend to have an appetite for second, third and fourth properties, funding these to a greater extent than other buyers from existing assets (40 to 55% of their investments in property are debt-free), says the KF report.

Forty-four per cent of most category HNWIs have three or more residences and 28% two residences but among the dollar billionaires, the super rich, 60% own three or more residences, often not regarding any as their main home. 

In looking for additional homes, it should be noted, said Steward, that HNWIs place physical and property security high on the list, with political and economic security a close second.

Steward said that in the light of the huge differences in prices between prime SA and prime international properties her firm will now be assisting Knight Frank to publicise to a far great degree the opportunities that now exist in SA. 

For further information contact Lanice Steward on 021 671 9120 or email lanice@anneporter.co.za.