23 March,2009 10:35 AM IST | | Agencies
London has been pushed off its top spot by Monaco as the most expensive place to buy residential property, with the British capital and English counties suffering some of the biggest price falls in the world, reported the Financial Times.
Monaco is now the world's most expensive residential market, where prime property is being sold for u20ac50,000 per square metre (up 2.1 per cent in 2008), followed now by London, at u20ac28,000 per square metre, and then Manhattan, at u20ac16,500 per square metre (down 4.1 per cent).
London also saw one of the biggest falls in value of any part of the world, down 17 per cent, beaten only by the 25 per cent falls in prices in Hong Kong.
The annual Wealth Report, compiled by Citi Private Bank and Knight Frank, the upmarket estate agent, shows that the prime residential property slump has already begun to have a material impact on the very rich, following the end of the unfettered boom in extravagant homes last year.
Almost all of the world's wealthy represented by the survey reported a fall in the value of their property portfolios last year, with prices either stalling or falling in three-quarters of cities round the world by the end of the year.
Even so, on an annual basis, the tail end of the property boom for expensive properties in the first months of last year meant that more than half of locations managed to record positive price growth during the full year.
"The figures paint a gloomy picture for prime residential property prices round the world," said Liam Bailey, head of residential research at Knight Frank. "It is now clear that not even the most desirable property round the world will remain immune."
This time last year there appeared to be resilience in the market for luxurious homes, with record gains in prices even as other parts of the market were falling.
The report, a comprehensive analysis of the global markets for so-called "prime" homes of more than u20ac1m, shows that previously buoyant markets turned very quickly in the last months of the year.
Property prices in Dubai, for example, rose almost 11 per cent in 2008, but fell by 19 per cent in the final quarter of the year. Mr Bailey said south-east Asian markets were not hit as quickly by the credit crunch, which, he explains, is why cities such as Bangkok and Jakarta head growth this year.
A poll across the private client managers at Citi, which manage $173bn in private money, indicates that the fall in market values is already having an impact, with more than 90 per cent of wealthy individuals' property portfolios falling in value last year. Property, on average, accounted for 30 per cent of their investment portfolios.
However, the poll indicated that just 5 per cent of those surveyed were "very concerned" about the fall in value, and revealed an appetite to buy property to take advantage of the price falls.
Almost 55 per cent planned to increase exposure to residential property as an investment over the next two years.
The survey showed that almost all represented by the survey had reduced exposure to hedge funds, while philanthropy was also set to suffer after a rapid decline in recent years.
In a separate part of the study, London and New York were named as the top global cities.
New York was ranked top for economic activity and Washington for political power. London was deemed to have the most knowledge and influence, while Toronto offered the best quality of life.
