Knight Frank launches the European Cities Review. Six years on from the start of the global crisis, the report aims to take the pulse of 14 diverse city markets by examining price performance, demand drivers, levels of supply, and future trends.
Key Highlights:
- Madrid and Dublin are the standout recovery markets of 2013.
- Paris is increasingly good value compared with other Tier-1 cities in Europe.
- Foreign buyers account for the largest component of demand in Monaco and Venice.
- Munich is forecast to see the largest increase in its population of wealthy individuals over the next decade.
Key Findings:
• There will be 15,668 UHNWIs living in Europe’s 14 key cities by 2023.
• Average annual change in prime prices across 14 luxury European city markets is 2.1% in Q1 2014, compared to -6.1% in Q4 2009.
• The economic landscape is picking up – Munich, Rome and London are forecast to see the largest rise in GDP growth in 2014 compared with 2008.
• Cities are increasingly important to their national economies – Some cities like Dublin, Vienna and Zurich are emerging as powerhouses of their national economies. London is responsible for generating 22% of the UK’s GDP; in 1997 this figure was closer to 19%.
• Prime markets are recording stronger price growth – Dublin’s and Madrid’s turnaround in luxury price growth are the most evident, but Monaco, Paris and Moscow have also seen an improvement.
• Some mainstream markets are catching up – mainstream prices in the UK, Russia and Switzerland are outperforming luxury prices in their key cities. On average, luxury prices rose 2.1% while mainstream national prices rose 0.6% in the year to March 2014.
“The critical question is whether prevailing wealth flows will alter now that the worst of the Eurozone crisis is over. As economic indicators improve, the safe haven effect may not be uppermost in luxury buyers’ minds. Instead, lifestyle, proximity to schools or universities and security considerations may be increasingly influential,” says Nicholas Holt, Head of Research for Asia Pacific at Knight Frank.
Nicholas adds, “Although wealth creation is forecast to be strongest in emerging markets in Asia and Latin America, the appeal of Europe’s luxury bricks and mortar will – due to its history, diverse cultures, architecture and climate – mean it will remain the location of choice for the world’s wealthy.”