Highlights and Trends People Can Expect To See In Global Markets For 2013

The London-based independent property consultancy firm Knight Frank has stated
that 2013 is going to be a year where people can expect to see more growth within
numerous prime cities worldwide even though there are on-going issues which are
related to economic instability.

In fact, luxury markets around the world have been seen coming around full circle
despite having seen a drop in market confidence since property prices fell after the
global downturn. But in a matter of one year, prime cities such as London, Hong
Kong, and Shanghai were making impressive quarterly price gains of 5.5 percent, 5.6
percent, and 9.8 percent respectively.

Back in 2006, Knight Frank had come up with the Prime Global Cities Index as a
means to measure luxury housing market performance within important cities all
around the world. It now stands 18.7 percent above the lowest levels seen in the
second quarter of 2009. However, many are impressed by more than the actual
numbers but by the speed at which markets were able to rebound as the index found
numerous markets regaining pre-crisis levels by the first quarter of 2010.

HIGHLIGHTS TO EXPECT IN 2013

Among the many highlights that are expected in 2013 are:

•

A 2.5 percent average increase on prime residential prices within the 14 cities
that are counted in the study, including Miami, Moscow, and Dubai being the
most notable performers.

•

A possible slowdown in global economy which would put prime residential
markets at risks which would then be followed by cooling measures that will
be implemented by each government. Nevertheless, the on-going economic
instability has also proven to be a driving force as far as demand is concerned
wherein high-net-worth individuals are actively looking for safe investments
to maintain their wealth.

•

Inventory supply, or the shortage of it, is expected to be a key factor in what
will determine the price within cities such as New York, Moscow, and Miami.

•

Regulatory measures implemented by the government are expected to regulate
price growth within Asian markets. However, the west-east shift in the balance
of economic power could mean more prospects in the near future.

Many are witness to the fact that prime property has managed to do more than just
endure the economic crisis and perform better than their traditional counterparts as
luxury markets have also been blossoming due to economic uncertainties such as the
Euro-zone debt crisis, geopolitical tensions around the Arab Spring, and even the
unavailability of alternative options for other high-value assets.

Aside from the economic uncertainties, the low interest rates and the preference of
high-net-worth individuals for transparent markets are also key factors in the switch
from ‘crisis’ to ‘safe haven’ as far as a lot of prime markets are concerned.

The number ‘centamillionaires’, or individuals whose disposable assets are in values
of $100M and up, have increased by 29 percent from 2006 and 2011worldwide. Such
individuals within Latin America, Southeast Asia, and South Central Asia over the
same period have increased by as much as 67 percent, 80 percent, and 200 percent
respectively.

High-net-worth individuals within emerging markets have also understood the value
of looking beyond national boundaries in order to achieve double-digit annual returns
on their investments. For instance, Miami has been able to cater to wealthy people
from countries like Brazil, Venezuela, and Argentina while Dubai is becoming a top
location for wealthy people from India as well as Iran.

TRENDS TO EXPECT IN 2013

Knight Frank envisioned three global trends which would create an impact on luxury
residential markets worldwide in 2012: wealth creation, the rise of ‘safe haven’
investments, and a broader gap between East and West.

In 2013, Knight Frank expects to see the same trends to carry on. However, there will
be more movement of currency from city to city.

People who are looking for trophy homes will surely pick up in numbers because of
the fact that there are a significant number of new projects which aim to break barriers
in terms of existing standards for modern luxury. As early as now, many of the high-
rise development projects found within Miami are already being acquired by high-net-
worth individuals and such a trend is expected to become even more apparent in the
upcoming months.

As far as the actual cities are concerned, Knight Frank had noted Moscow to have the
strongest price growth out of all 14 cities included in the study with a forecast annual
growth of 10 percent.

Dubai’s luxury market is expected to see property prices rise by around 5 percent to
10 percent as relocating professionals from the United Kingdom and Asia are being
seen in the city while the inventory supply for high-quality homes is not seeing new
options being added.

Paris, Geneva, and Shanghai are the only cities where price drops are expected in
2013. Nevertheless, the forecast expects a price decline of less than 5 percent in all
three cities.

Limited inventory supply is also expected to be a major aspect to consider within a
number of cities such as Moscow and Miami where the shortage of luxury homes is
likely to boost property prices by significant amounts.