Chinese luxury property market slows down as Europe picks up the pace, Knight Frank's property index reveals

09/03/2018 News Team

Luxury residential property markets have slowed down in China’s top-tier cities whilst Europe is seeing positive growth after a decade of weak results, Knight Frank's Prime International Residential Index (PIRI) has revealed.

The PIRI 100 tracks the performance of the world’s leading prime second home and city residential markets. In 2017, the overall index increased by 2.1 percent, compared with 1.4 percent in 2016 due to the expansion of the global economy. Two thirds of the locations in the PIRI 100 recorded static or positive annual price growth in 2017, with 11 percent posting double-digit returns. 

The Chinese city of Guangzhou leads the rankings, with prime prices up by over 27 percent. However, unlike in 2016 when Guangzhou was joined by Beijing and Shanghai in occupying PIRI’s top three positions, this year it is China’s only entry in the top ten. The weakening in Beijing and Shanghai contributed to a slight drop across the Asia-Pacific region as a whole, with markets averaging 4.4 percent growth in 2017, down from 5.2 percent the previous year.

In 2016, a number of prime European residential markets were still in “recovery mode”, according to the Index. Twelve months later, four of the top ten performing prime residential markets are in Europe: Amsterdam, Frankfurt, Paris and Madrid. London, for its part, bounced back in 2017, moving from 92nd to 72nd place in the PIRI 100 rankings. Prime prices in the UK capital ended the year marginally lower, down 0.7 percent, compared with a fall of 6.3 percent a year earlier. 

US markets put in a steady performance in 2017 with Aspen sitting third in the overall ranking, recording 19 percent growth. Los Angeles, New York and Miami saw moderate growth of 5.1 percent, 4.6 percent and 2.2 percent respectively in 2017.

In Africa, Cape Town takes second place in the PIRI 100, recording almost 20 percentgrowth year on year. The Atlantic Seaboard is attracting buyers from overseas as well as from elsewhere in South Africa, but both new and existing stock are in short supply. Istanbul takes top place in the Middle East with growth of almost five percent.

Knight Frank predicts that the outlook for 2018 is one of economic growth which will continue to support prices, but performance could be tempered as more central banks start to raise interest rates.

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