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March 04, 2022 at 04:15 PM
Related: 15 Best U.S. Cities to Invest in Real Estate: 2022
Luxury home prices burst out of their pandemic doldrums in 2021 and became the asset class of choice for ultra-wealthy individuals around the world — those with net assets of $30 million, including primary residence, according to Knight Frank’s analysis of 100 cities.
The value of the Knight Frank Prime International Residential Index, the PIRI 100 — which appears in the firm’s 2022 edition of The Wealth Report — increased by 8.4%, up from slightly less than 2% in 2020. This was the biggest annual increase since the index’s rollout in 2008.
The firm gauges prices in each market by tracking a “basket” of properties at each of its offices. Each basket is reviewed annually to ensure it’s representative of the local market’s prime real estate and consists of properties Knight Frank has in-depth knowledge of, according to the real estate firm.
Of the 100 luxury residential markets tracked, 35% of locations experienced price increases of 10% or more, while only seven markets saw decreases.
The Americas were the best regional performer, posting average growth of about 13% and placing six cities among the top 10. Asia/Pacific increased by 7.5%, mainly driven by Australasia’s 12.3% rise; Asia alone increased by 5.5%. Europe, Middle East and Africa posted average growth of 7.2%.
The report cited these factors as driving demand last year:
- Low interest rates and availability of cheap finance
- Shortage of prime stock
- Rising wages and accrued savings in lockdowns (U.S. households amassed $28 trillion during the pandemic, according to Oxford Economics)
- Strong equity market performance and record bonuses
- Reassessment of housing needs and lifestyles
- More flexible working patterns
- Wealth creation: 5 million new millionaires globally in 2021
- Appeal of property as an inflation hedge
See the gallery for the 20 global markets with the biggest price increases on high-end real estate.
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