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How Does Cape Town & Sandton Compares With The Most Expensive Residential Property Markets in World?

Category Local Market Analysis

Market research firm New World Wealth together with location analytics specialists Webster Pacific, recently reviewed the world's most exclusive prime residential property markets.

The index focuses on the most exclusive parts of each city or town (i.e. prime) and figures are rounded to the nearest $1 000.

Top 20 cities/towns ranked by US$ per square metre (June 2018):

- Monaco: $49 000
- New York: $34 000
- London: $33 000
- St Tropez: $32 000
- St Jean Cap Ferrat: $31 000
- Hong Kong: $28 000
- Geneva: $26 000
- Sydney: $25 000
- Lake Como: $21 000
- Porto Cervo: $21 000
- Pebble Beach, Monterey: $21 000
- Zurich: $20 000
- Singapore: $19 000
- Paris: $18 000
- Nice: $18 000
- Tokyo: $17 000
- Melbourne: $16 000
- Los Angeles: $14 000
- San Francisco: $14 000
- Miami: $14 000

Monaco’s prime prices of $49 000 per sq.m. are 9.8 times higher than prime prices in Cape Town (Atlantic Seaboard) which currently stand at around $5 000 per square metre (R72 000) and 21,3 times more expensive than prime prices in Sandton  - which are at around $2 300 per square metre (R33 000). (Note: using exchange rate of R14.40/US$).

As a complement to New World Wealth estimates of the markets with highest-priced luxury real estate, Webster Pacific created heat maps to predict the specific areas within three markets that contain the highest-priced luxury real estate.

According to Webster Pacific analyst Steve Bazant: “While many of the areas of predicted highest prices were confirmed by our maps, such as the Upper East Side and Upper West Side in New York City and Beverly Hills and Santa Monica in Los Angeles, there were some areas that surprised us, including the area between Chelsea and Greenwich Village in New York City and Los Feliz in Los Angeles.” 

Square metre stats methodology

It is important to note that New World Wealth indices work off a different basis from most other residential indices. Our indices track the square metre prices achieved in selected prime 200 to 400 square metre apartments in each area, which we believe is the best way to check for price movements. We focus on the most exclusive apartment complexes in each area (i.e. prime). So for New York, we would focus on the best apartments on 5th Avenue.

The four main ways used to check price growth in an area include:

Transactional indices - these are normally compiled by major banks. They are based on the total/average value of purchases that go through the bank during a period. In our view, these are the least accurate - they are often restated heavily over time.
Average sales price indices - also normally compiled by major banks. These indices can be distorted by big sales (i.e. the sale of a mansion) during a particular month/quarter.
Repeat sales indices - this index is very accurate but difficult to compile over a short period of time or in a small area as it requires multiple sales on the same property.
Square metre price growth - we use this one. By focusing on sales in certain apartment complexes one can get an idea on how square metre prices are changing. This does not require a large sample. Normally for an area such as New York, tracking 3 to 4 prime apartment blocks can give one a very good indication of price movements. The only limitation of these indices is that they only work well on apartments, as houses normally have gardens and additional land which is difficult to value on a square metre basis.

Spotlight on the rise of hotel residences worldwide

Many of the most expensive apartments worldwide are hotel residences. Originally a New York phenomenon, the hotel residence trend has started to catch on in other major cities and holiday hotspots around the world. ‘Hotel residences’ refer to apartments/villas in existing hotels which can be purchased. They essentially allow owners to live in a hotel permanently and enjoy the same services as normal guests do (i.e. room service, dining, cleaning, etc.).

Hotel residences are often difficult to identify such as ‘One Hyde Park’ in London - the apartments are essentially hotel residences serviced by the Mandarin Oriental next door.

Reasons for their rising appeal include:

- Appeal to those that travel a lot - facilities are maintained whether one is there or not.
- Access to services – room service, cleaning. 
- Access to facilities – pool, spa, entertainment, dining, bar. 
- Good security and big reception area for meetings.
Unsurprisingly, hotel residences sell at a premium to normal apartments.

Banyan Tree, the St Regis, the Mandarin Oriental, the Four Seasons, the Conrad Hilton and the Ritz Carlton are the main providers of hotel residences worldwide.

Notable hotel residence examples:

- Mandarin Oriental Residences (One Hyde Park) - London, UK. 
- The Plaza Pied-a-terre - New York, USA.
- St Regis Residences - New York, USA.
- Four Seasons Private Residences - Seychelles.
- Ten Trinity Square - London, UK.
- Baccarat Residences - New York, USA.
- Palazzo Tornabuon - Florence, Italy.

Author: Andrew Amoils

Submitted 19 Sep 18 / Views 698

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