Knight Frank’s forthcoming edition of The Wealth Report reveals the result of its Prime International Residential Index (PIRI 100). The index tracks the movement of luxury residential prices in 100 cities and second home markets globally for the 12-months ending December 2020, with four Asia-Pacific cities coming in at the top five.
Knight Frank’s forthcoming edition of The Wealth Report reveals the result of its Prime International Residential Index (PIRI 100). The index tracks the movement of luxury residential prices in 100 cities and second home markets globally for the 12-months ending December 2020, with four Asia-Pacific cities coming in at the top five.
Globally, prime residential prices performed better than expected in 2020. The 100 locations covered by PIRI 100 recorded average price rises of 1.9%, up from 1.8% in 2019. In Asia-Pacific, 14 out of 23 prime markets recorded price growth, highlighting the resilience of prices in the region.
Auckland leads the index with average prices ending the year 18% higher. New Zealand’s handling of the COVID-19 crisis, its rapid economic recovery, ultra-low mortgage rates and a limited supply of quality stock were behind this surge. However, the prices are expected to normalise as government-supported policies slowly tighten to maintain a healthy market.
Victoria Garrett, head of residential, Asia-Pacific at Knight Frank said: “The low borrowing costs and the improved vaccine optimism seen towards the end of 2020 were the main drivers that aided some of the prime residential markets in Asia-Pacific through the pandemic storm.”
Table 1 : Prime residential prices annual % change
Cities in the Asia-Pacific region occupy 5 of 10 top spots in the PIRI 100 ranking, reinforcing their firm market fundamentals that allowed them to rebound at unexpected rates. Particularly in the Chinese Mainland markets, property sales volumes across 30 major Chinese cities had returned to the average daily levels observed in 2019.
In the land down under, Australasia was one of the top performing regions, averaging an annual growth of 4.9%, due to the surge of pent-up demand as lockdown eased and homeowners re-evaluated their lifestyles. Perth (+4%) was Australia’s frontrunner, and Sydney (+1%) registered its highest volume of prime sales ever in Q3 of 2020.
“Grounded by travel bans, the desire to live in green open space that enables a better work-life balance has never been greater. Wellness, wellbeing and family have been at the forefront for many homebuyers in Australia and New Zealand who have been looking within their country to upgrade their main residence or purchase a holiday home closer to home; Expats have been returning home and luxury buyers are also looking to upgrade their main residence or invest in a secondary residence as a result of the bullish stock market,” Victoria Garrett.
This outlook is further reinforced in Knight Frank’s survey of over 600 private bankers, wealth advisors, intermediaries and family offices, the Attitudes Survey*, which revealed that one in five UHNWIs in Asia-Pacific is planning to buy a new home in 2021, with the biggest reason being upgrading of their main residence domestically, followed by a holiday home – either domestically or in US, UK and Australia.
Table 2 : Where are your UHNWI clients planning a home purchase in 2021?
“Noticeably, there’s a change in strategy in the ultra-wealthy due to the global uncertainty that the COVID-19 pandemic has caused. As a result, they are investing in additional homes domestically wherever they can (due to scarcity of stock), followed by second homes in cities and countries that best fit their needs after re-evaluating their lifestyles in the new normal,” added Garrett.
In terms of home attributes, the respondents prefer a home with their offices within or close by. This is followed by a home with access to transport links (for Asian buyers who prefer urban areas), and homes with an outdoor space within or nearby (for Australasia buyers who prefer rural or coastal areas).
Table 3 :When choosing a new home which attributes are most important? (1= most popular)