Recession Hit Global Luxury-Leisure Property Markets Hard in 2009

Residential News » Residential Real Estate Edition | By Michael Gerrity | March 26, 2010 11:45 AM ET

Luxury leisure markets suffered from the global recession, suggests a new study carried out by the experts of Citi Private Bank and Knight Frank Consulting Group.

Last year global prices for luxury housing fell by an average 5.5%, while prices for leisure properties decreased by 13.9%. In contrast, prices for urban real estate, in 2009 even increased - by 0.4%.

Prices for luxury housing decreased in 75% of the 56 regions included in the international price index of Knight Frank. The most intensive drops observed in Dubai (-45%) and Dublin (-25%), while the fall in the "traditional luxury regions" such as Paris and Monaco amounted to - 15%. Prices for the Caribbean elite property decreased by10%, while Courchevel - 12.4%.

Surprisingly, by the Asian region was not affected by the crisis: prices for luxury real estate in Shanghai has spiked 52%, in Beijing - 47%, while in Hong Kong - by 40.5%.

"Certainly, falling demand was the main reason for price drops for luxury property last year. However, banks are still willing to lend the purchase of real estate in the European capitals - London, Paris as well as Cannes, St. Tropez, etc. This means that they are confident in the liquidity and strong demand for these objects", - said the report.

According to the report, real estate still remains the most attractive segment for private investors. It accounts for an average of one third of the investment portfolio of a private investor with the value of assets more than $1 million.

The experts are confident that this year the luxury property segment will provide good opportunities for investment. "This year we expect positive dynamics of prices for elite housing. For instance we are looking for recovery of prices for premium real estate in such places as New York."  

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