Forbes has released a list of the top ten most expensive cities for luxury real estate in 2012, with Hong Kong and Tokyo leading the list. Here’s how it all pans out:
1. Hong Kong, China. The average property is 5,200 square feet and the average price per square foot is $11,000, meaning the average luxury home is worth $57 million! A property sold in 2011 holds the record for the city’s most expensive deal, having earned $13,000 per square foot.
2. Tokyo, Japan. Average property size is 16,000 square feet; average price is $7,600 per square foot.
3. London, U.K. Average property size: 7,900 sq. ft. Average price per square foot: $5,300
4. Paris, France. Average property size: 10,800 sq. ft. Average price per square foot: $4,400. Paris has the highest average net worth of billionaires in the city.
5. Moscow, Russia. Average property size: 4,600 sq. ft. Average price per square foot: $4,250. Interestingly, though its real estate market ranks fifth, Moscow is home to the largest population of billionaires in the world—84 of the wealthiest call it home.
6. New York City, USA. Average property size: 6,500 sq. ft. Average price per square foot: $4,100
7. Shanghai, China. Average property size: 5,400 sq. ft. Average price per square foot: $2,125
8. Singapore, Singapore. Average property size: 12,300 sq. ft. Average price per square foot: $1,820
9. Mumbai, India. Average property size: 6,800 sq. ft. Average price per square foot: $970
10. Sydney, Australia. Average property size: 19,400 sq. ft. Average price per square foot: $880.
So what does this mean? One thing of note is that, based on these trends, billionaires are buying more properties in the cities than in the countryside, likely because they need to be in the city to do business. Global real estate firm Savills is predicting a drop in luxury purchases in 2013 because wealthy buyers seem to already be invested in major cities, meaning there likely won’t be as many frenzied buying practices. Savills has also noted that there may be a change in what parts of the world are interested in luxury real estate, with more buyers from Malaysia, Indonesia, and the Philippines and fewer from China, India, and Singapore.
Governmental policies regarding luxury real estate are another factor that could impact its sale. Measures imposed in Hong Kong include higher stamp duty and property taxes for foreign buyers, and high taxes in France have also been negatively affecting luxury sales.
However, motivations for investing in luxury real estate have changed as well. Wealthy buyers are purchasing homes not as personal long-term investments but as opportunities to gain revenue by renting them out.
In short, luxury real estate is here to stay, and it seems like Hong Kong’s reign over the leader board isn’t likely to end any time soon.