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Who are the biggest players in the luxury residential market?


Luxury dwellings are of course a prime target for any residential property investor anywhere in the world. With their high value and the affluence of the target demographics they cater to, making the right investment in this sector can reap some very lucrative returns.

As property prices soar around the globe, it is worth knowing which cities are currently leading the way in the luxury residential market. Property consultancy Knight Frank recently published its forecasts in the sector for the year ahead, in its new 'Prime Global Cities Forecast' report.

One of the main findings from the analysis was that New York is predicted to come out on top in 2015. With luxury residential prices in Manhattan to grow by 5 to 10 per cent over the course of next year, the stateside hub has a firm grip on the top spot.

However, the city has a very close competitor - although on the other side of the world in a geographical sense - and a range of sector-wide challenges could make things interesting in 2015.

Here are the key insights from Knight Frank's latest report and what they mean for luxury investors.

New York leading the way

According to Knight Frank, New York will be the hotspot next year as far as the luxury sector is concerned, with prices in the downtown area especially expected to soar. Strengthening international demand and an improving economy have combined to raise prime prices by nearly 7 per cent this year, the consulting group revealed.

In addition, growing attention from Chinese investors - encouraged by relaxed visa terms - could boost activity in 2015.

However, New York is actually one of just two cities around the world where prime property prices are expected to increase. Knight Frank found that property values in Sydney could increase by up to 5 per cent next year, putting it on a par with New York.

The areas of focus in Sydney are the eastern suburbs and Lower North Shore.

The factors driving price growth in this Australian city are strengthening business confidence backed by "an increasing sense of political stability", which are certainly helping to draw foreign interest. Of course, the weak Australian dollar is also playing its part.

While the luxury property market is booming in these two cities, others aren't faring so well. Knight Frank revealed, for example, that prices in London will remain stable, while forecasting declines in Paris, Singapore, Hong Kong, Geneva and Dubai.

So what are some of the biggest challenges in the global sector, and are there any possible silver linings to the cloud?

Challenges and opportunities in the sector

Knight Frank listed the top five risks that could potentially impact the luxury market next year - and to balance it out, five opportunities that could arise.

Among the top risks is the removal of government stimulus, which could lead to increases in interest rates. Currency instability may also be a factor next year, with its obvious implications on cross-border dealings.

Political intervention, reversals of economic growth and the persisting concerns surrounding tax were also singled out as possible obstacles.

On the other hand, wealth growth around the world could increase demand - with plenty of potential from emerging markets. A "growing appetite for alternative markets", coupled with "more speculative plays from investors", could introduce a lot of diversity into the global market next year, Knight Frank reports.

A stabilising economy on the whole and improvements in infrastructure have also been outlined as possible sources of opportunity in the coming year.

With another exciting 12 months on the cards, the global luxury residential market is likely to be a busy one in 2015.

Date Published: 15 Dec 2014
Category: General News

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