Business & Money | Tuesday 8 September, 2015 12:44 pm |

CBRE released its Global Living Report: A city by city guide, the final research report in a series of comprehensive area guides for the UK and international residential markets, designed to explore 31 of the world’s most famous residential locations.

 

The Global Living Report by CBRE highlights that Hong Kong continues to hold its position as the world’s most expensive residential location at an average of US$1,377 psf. This high figure, however, is relative to the smaller size of apartments within a market which continues to be underpinned by a severely constrained supply backdrop.

 

London cements its place as the world’s second highest value location according to average price per square foot. The Global Living report also brings to light how many cities are starting to witness a bounce back following the global crisis of 2008, coupled with those which have proven less resilient.

 

The Dubai residential market is considered ‘affordable’ when compared with London, New York or Hong Kong. For instance, in London, prime property comes in at US$3,000 psf, compared to US$1,300 psf at the very top end of the market in Dubai. Low import taxes make it easier to source high-quality material in Dubai, as opposed to London. Furthermore, the cost and access to labour differs considerably between UAE and other European and international cities. Scarcity is another factor: land is difficult to come by in Paris, London, New York and Barcelona. Another factor is the on-going construction in Dubai; there are still many opportunities to infill. 

 

Safina Ahmad, Head of Residential, CBRE MENA, said, “A significant factor affecting property prices is global currency fluctuations. The markets pegged to the dollar, and also the relatively strong UK sterling are looking comparatively more expensive. Conversely a competitive euro has opened up markets like France and Spain in mainland Europe. 

 

Where recent growth has been particularly marked, investors are now expecting either slower or negative growth. Average growth in London and Dubai for example, as well as a number of other international markets, have hit double digit highs for at least two years prior to 2014. We’re now witnessing a market correction and more modest growth with small pockets of localized decline.”

 

 

Jennet Siebrits, Head of Residential Research at CBRE, comments:

 

“As the global population continues to expand and new innovations impact the property market, we are witnessing a move towards greater integration between our cities. What our research has found however, is that global cities are retaining what makes them unique whilst sharing valuable knowledge and experience that can enhance other cities around the world. 

 

“Using the advantage of CBRE’s unique position as a global property company, we have witnessed some unexpected findings in the Global Living Report, such as in Dublin, where house price growth was at a global high of 22 per cent, and in Moscow, which has the highest proportion of owner occupiers in our sample. 

 

“In Europe, we report how the central London residential market has rebounded at a significant rate, with average house price increases of 86 per cent since 2009. In the Outer London market we have witnessed a slower growth of 63 per cent during the same period, demonstrating a divergence which is now narrowing, as overall prices in the UK’s capital reach 14.8 per cent in 2014 alone, offering investors significant growth prospects.”

 

“With the continued population growth of about 5%, there is a consistent demand for housing, particularly in the affordable space. The MENA region offers a large housing supply but it mainly sits in the luxury space targeting a more affluent buyer profile. We are faced with a smaller pool of non-resident buyers as they have responded well to mainland European markets which have recently opened up in light of an attractive euro, for example, Marbella has seen significant interest from Saudi buyers,” commented Ahmad.

 

 

The Global Living Report provides a snapshot of 31 global cities, showcasing the differing influences in each city and providing a comparative study of house prices, rental growth and living costs, among other factors.

 

Middle East, North Africa and Turkey

 

Abu Dhabi – Abu Dhabi’s population of 2,570,000 is expected to increase by 54% over the next decade, adding an additional 1.38 million residents. The property market experienced 31% growth in 2013 and 24% growth in 2014, and has since taken on a more stable pace as a result of lower oil prices. The rental market is robust, with 12% growth over the last year taking values to US$2,574 per month. 

 

Dubai – The promise of an opulent lifestyle and tax-free salaries has created a large expat community in Dubai, with 92% of the population made up of expats and migrant workers. A buoyant market saw 22,989 transactions last year, 28% higher than the 10 year average. A trend of large quantities of new developments is expected to continue, with 25,000 new units built on average each year.

 

Istanbul – The fifth largest city in the world, Istanbul is seen as a strong investment opportunity. Last year the city enjoyed 15% annual house price growth and the rental market experienced similar growth of 12% in rents. Istanbul has the lowest average property price in the sample at US$109 psf.