OK, so it’s not a question many of us will need to ask ourselves, but bear with me: if you had $1m to spend on prime residential property, where would you spend it?
In its regular Wealth Reports, estate agency and property consultancy Knight Frank describes “Prime property” (also called luxury or prestige property) as follows:
The most desirable, and normally most expensive, property in a defined location. Commonly, but not exclusively, prime property markets are areas where demand has a significant international bias.
In other words, it’s a way of examining property which focuses on the upper end of the market, where international investment can balloon prices quickly, as opposed to looking at averages over the whole city.
To that end, our friends at Statista have put together this graphic showing how much prime property your buck can buy in cities around the world, based on Knight Frank’s data. Each rectangle represents how much property you could buy for that price in each city: a smaller rectangle means a more expensive market:
What’s striking is the scale of the contrast: in the most expensive city, Monaco, you can buy 17 m2: that’s the equivalent of a single large-ish room, of 4m by 4m. In Cape Town, that million dollars would buy you a princely 255m2. (According to the Royal Institute of British Architects, the average one-bed flat in the UK is 46m2.)
In London and New York, it won’t surprise you to hear, a million dollars won’t buy you much more prime property than in Monaco: 22m2 and 27m2 respectively.
This fact goes some way towards explaining the housing crises in both cities, for two different reasons. First, ultra-high prices at the top end can drag up prices across the board. And second, since the appetite for prime property is so high in these cities, that’s what developers build: that leads both to gentrification, and a lack of affordable houses for the rest of us.
Overestimating this demand, however, can lead to the opposite: a burst bubble. Perhaps those squares will be swelling sooner rather than later.
This article is from the CityMetric archive: some formatting and images may not be present.