Knight Frank’s 2017 Prime International Residential Index (PIRI) rankings reveal how many square meters of luxury residential real estate could be purchased for one million US dollars across the world’s top cities last year.
In 2016, a high-net-worth individual looking to buy a luxury apartment in Tokyo would have been able to buy about 91 square meters (about 979 square feet) in Tokyo versus 17-sqm in Monaco, 20-sqm in Hong Kong, and 26-sqm in New York, according to Knight Frank.
The top three cities (in effect, the most expensive cities per sqm of luxury property) have barely switched positions since Knight Frank started its index six years ago, but according to Knight Frank, Tokyo prime property is actually less expensive than it was in 2014, when $1 million would have only bought 84-sqm of high-end living space.
Tokyo Ranks 97th in 2017 PIRI 100
The cost of Tokyo luxury residential real estate fell 8.1% year-on-year in 2016, according to the PIRI 100 Index, ranking 97th in the 100-city list. This is a stark reversal form a few years ago, when Tokyo came in 22nd.
The Tokyo luxury residential market is defined as properties which cost at least 100 million yen ($816,000).
Overall, the value of the world’s leading prime residential markets recorded slower growth in 2016.
On average, values rose by 1.4% in 2016, compared with 1.8% in 2015. However, the PIRI 100 also reveals a large gap of 49 percentage points between the top and bottom ranking, up from 45 in 2015. The top tier is dominated by cities in China, New Zealand, Canada and Australia, while oil-dependent markets such as Moscow and Lagos.
One reason for Tokyo’s year-on-year drop? The report points out that “local economic activity has a strong bearing on price performance (all of this year’s top 10 rankings report 3% or more in annual GDP growth).” In 2016, Japan’s economy grew at about 1.0%.
Of the locations tracked by PIRI, 61% recorded flat or rising prices in 2016, down from 66% the year before. Along with the slight drop in average price growth already noted, this suggests a marginal slowdown in the performance of global luxury residential markets.
By Region and Chinese Cities’ Strong Performance
China’s cities have catapulted themselves up the PIRI rankings with Shanghai, Beijing and Guangzhou claiming the top three slots, all exceeding 26% year-on-year growth.
A breakdown of the PIRI 100 by world region shows that Australasia (+11.4%), Asia (+5.1%) and North America (+4.5%) are the key engines of growth. Europe and the Caribbean sit firmly “mid table”, recording moderate shifts of 0.5% and -0.3% respectively. Latin America (-2.7%), the Middle East (-3.3%), Africa (-3.4%) and Russia/CIS (-5.5%) all recorded negative growth, due to a combination of weak currencies, slowing economies, rising inflation, low oil prices and growing political risk.
Source: Knight Frank The Wealth Report 2017
Top Photo: View from a luxury apartment for sale in Azabu Juban, Tokyo