What a difference a year makes

Many major global property markets recorded positive price growth in 2008 but by the end of the year that had stopped or fallen in 75 per cent of locations, according to a new report...

There were wide variations in performance around the world with Hong Kong showing the sharpest annual drop in property prices with a fall of 24.5 per cent, the Knight Frank 2009 Wealth Report, shows.

While Bangkok saw residential prices rise by 22.5 per cent and overall just under 50 per cent of the locations featured managed to record positive price growth on an annual basis in 2008.

Other real estate markets saw a drastic Change from boom to bust. For example, Dubai recorded annual overall growth of almost 11 per cent but property prices fell by 19 per cent in the last quarter of 2008.

The report, which includes new research from Knight Frank and Citi Private Bank, shows that prime property in Monaco is the most expensive in the world costing an average of £50,500 per square metre for the best properties with London and Manhattan in second and third place.

But despite house price falls almost 55 per cent of high net worth individuals plan to increase their exposure to residential property over the next two years.

Global farmland prices started to slip last year on the back of falling commodity prices, but remain more resilient than residential or commercial property. Exchange rate fluctuations mean affordability in some countries has increased for US dollar and euro-backed buyers, despite strong price increases in local currencies.

'Covering a period of global wealth destruction rather than creation, the report's annual analysis of prime residential property markets and the behaviour and attitudes of the wealthy has become even more relevant,' said Liam Bailey, Head of Residential Research at Knight Frank.

'Even the world's richest people have cut their discretionary spending and most desirable prime residential property markets have now been affected by the global downturn. Although almost half the locations in Knight Frank's Prime International Residential Index managed to show a positive overall return in 2008, price growth had either stalled or started to decline in nearly 75 per cent of them by the end of the final quarter,' he added.

But it is a positive sign that the rich are committed to property despite the gloom, he added.

Source: www.propertywire.com