New geographies of wealth creation have caused a worldwide change in demand for real estate. New nationalities are now seeking to buy in Asian cities, as well as the “old world”, meaning the last five years have seen a significant shift in real estate markets.

2008 was a turning point in the investment behaviour of the world’s ultra-wealthy citizens. The search for safe stores of wealth took money out of equities into gold, bonds and real estate, including the world’s most elite houses. It also marked a shift in the creation of wealth. As indebted North Atlantic countries commenced a long process of austerity, there was little or no increase in the numbers of ultra-wealthy individuals there. But, in the relatively unaffected and fast-growing “new world” economies, new billionaires were created with some velocity.

Since 2008, falling currencies have made real estate look even cheaper for a number of nations, so certain “old world” cities began to behave more like their “new world” counterparts. As a result, the past four years have seen a huge appetite for ultra-prime residential property in the world’s premier cities. Inevitably, this increased activity by wealthy buyers has caused significant price rises in many locations.

It is possible that 2013 may be another turning point. Many of the super-wealthy have nearly fully invested in the key cities, meaning that activity could abate in some quarters and shift to new locations. We have detected a stabilisation in many of the world city markets, sometimes assisted by deliberate cooling policies. There has also been a shift in Asia Pacific buyer interest towards the USA, for example, which currently looks good value. New investment may be less dominated by China, India and Singapore, as emerging nations such as Malaysia, Indonesia and the Philippines play an increasing role.

Taken from
Insights: World Cities Review Spring 2013

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