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Luxury Property Prices in World-Class Cities Boosted by Billionaires

A report in Property Wire highlights the fact that world-class cities are attracting global billionaires, who are investing their wealth in real estate, and by doing so are creating a new super class of prime real estate.

Billionaires are boosting luxury property values © Freefly - Fotolia.com

Apparently, the value of real estate has increased by up to 10% during the first six months of this year in the top 10 world-class cities, according to data published by Savills. It's no surprise to learn that Hong Kong is in first place, with prices that have increased by an amazing 83% between December 2005 and December 2010. Property prices have increased by another 10% to the end of June 2011 and now cost £6,700 a square foot. Tokyo is in second place with property prices costing £5,190 a square foot, with Paris coming in third at £3,270 a square foot and London fourth at £3,090.

While these costs are pretty staggering, it's the emerging markets that are seeing prices increase by the highest percentage. Prices in Russia have increased by 110% between December 2005 and December 2010, and have seen prices increase by 2% during the first six months of this year. Property now costs £2,520 a square foot.

Prices in Singapore have increased by 144% between 2005 and 2010, and by an amazing 16% this year, while real estate prices in Mumbai have increased by 138% and by 7% during the same time period.

Prices of luxury property has increased by an average of 10% during the first six months of 2011, compared to an average increase of 6% for median priced properties in the same cities. Global billionaires tend to have several residences, although most will have a base from which to do business. However Savills property index did make an interesting observation, as most of us imagine the super wealthy to have huge homes but apparently this isn't always true.

Billionaires living in the most expensive city in the index, in Hong Kong, tend to have homes averaging just 5,000 ft.², and those living in Moscow have even smaller homes at an average of 4600 ft.². This isn't the case in Sydney where homes of billionaires average almost 20,000 ft.², and also somewhat surprisingly in Tokyo, where in spite of the high prices the average home of a billionaire is around 16,000 ft.². A property of this size would cost around £83 million.

Allison Halliday

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.

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