Global prime property markets have shunned increasing growth, declining to an average annual growth rate of 1.3 per cent from 4.3 per cent per just two years ago.
The Prime Global Cities Index, which tracks the movement in luxury residential prices across 45 cities globally, registered its lowest rate of annual growth since the final quarter of 2009, when the world was in the grip of the financial crisis.
The index featured two African cities, Cape Town and Nairobi, with the index showing that Cape Town was the better performer. The South African city recorded a price growth of 2.1 per cent over the past year ending in the first quarter of 2019, beating global property renowns like London, New York, Hong Kong and Monaco.
However, Nairobi’s luxury property markets were downbeat over the past one year, recording a price decline of up to -6.5% and -0.5% in the first quarter of 2019. The chief occasion, an oversupply in the city’s high-end markets beyond the local levels of opulence, left high-end suppliers with only so much demand and the market correction set in.
The index ranked Nairobi at 42 out of the 45 cities surveyed. Following the economic events, high-end developments have somewhat subsided, but not entirely.
The index, cites the slowing rate of wealth creation globally in 2018, political and economic headwinds, trade war threats and Brexit woes as some of the adverse factors to the markets leading to the decline.
The IMF projects that 70% of world economies will face a slowdown in 2019
Strong cities (mostly European) whose market beat the index, showed characteristically strong tenant demand, limited new supply and relative affordability. Seven of the top ten performing cities were European.
The Prime Global Cities Index, published by Knight Frank, is a valuation index tracking the top 5% of housing markets in most cities. According to the index, on average the prices of luxury property have risen by 57.4% over the past decade.