From Barron's Penta blog:
Real estate in the world’s top cities is “full valued.” So says the “Candy GPS Report,” a study taking the pulse of real estate across the globe and compiled by Deutsche Asset & Wealth Management, Candy & Candy and Savills.
Roughly half of real estate investments in recent years made by
ultra-high net worth folks went to the top ten “alpha cities,” which
includes New York, London, and Hong Kong. According to Savills, between
2006 and 2012, the prices of real estate in the top-ten major cities,
from Moscow to Singapore, have risen 11% annually, versus 5% for those
outside those major urban areas. But now, after such torrid growth, the
prices for prime property markets globally should revert to more
regular, demand-driven growth, says Mark Roberts, head of alternatives
and real estate for Deutsche Asset & Wealth Management. He estimates
those returns will revert to their historic rates of 4% to 6% after
inflation.
Here, now, is where it gets interesting. As the prime markets settle
down, the research suggests that prices in “second-tier cities” could
pick-up pace, as wealthy folks broaden their search for yield.
“The real estate market globally is in the process of broadening,”
says Roberts, with ultra-high net worth investors looking farther afield
for a safe haven to shield their portfolios from rising interest rates.
The research identifies 12 rising but second-tier cities “that are
likely to outperform the prime world cities” in the coming years, where
cheaper properties make the local markets more “accessible and
potentially attractive to yield-seeking real estate investors.”...
- Savills, Candy & Candy, and Deutsche Asset & Wealth Management
- The graphic above compares the price of a 2-bedroom apartment in each city’s most desirable neighborhoods with the average.
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