How do waterfront locations affect prices around the world?

Waterfront properties in sought-after coastal locations cost 63% more, on average, than similar properties that are landlocked, according to Knight Frank analysis.

To find out what the biggest premiums for coastal views are, they surveyed local agents in 10 popular second-home destinations around the world to find out the premium paid to live on the water.

Across the board, prime waterfront properties in coastal locations around the world are worth an average of 63% more than their inland counterparts.

However, there are regional differences from city to city. Waterfront properties on Italy’s Lake Como and in Barbados have the highest price premium. In both locations coastal homes can command prices 100% higher than equivalent homes inland. They were followed by homes in Phuket in Thailand and the central Algarve along Portugal’s southern coast where values increase by 89% and 75% respectively.

At the other end of the scale prime waterfront properties in coastal locations in Dubai are only worth an average of 10% more than inland homes. In The Hamptons, home to some of the most expensive residential properties in the US, the presence of water only increases the value of a property by an average of 30%.

The full list can be seen below.

Lake Como, Italy: 100%

Barbados: 100%

Piglet, Thailand:89%

Central Algarve, Portugal: 75%

Miami, USA: 60%

Cannes, France: 40-60%

Cape Town, South Africa: 56%

Mallory: 50%

The Hamptons,USA: 30%

Dubai 10%

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Prime rents in key cities around the world

Prime rents in key cities worldwide rose by 0.2% in the first quarter of 2013, the index’s lowest rate of quarterly growth since late 2009.

Key points 

* The Knight Frank Prime Global Rental Index rose by 0.2% in the first quarter of 2013 and by 3.8% in the year to March

* The index has risen for 15 consecutive quarters and now stands 20.3% above its low in the second quarter of 2009

* Dubai saw the largest increase in prime rents, up 18% year-on-year

* The leading financial centres of Hong Kong, New York and London were some of the weakest

performers, recording falls of 2.3%, 2.6% and 3.1% respectively

* On a regional basis, the Middle East saw the strongest rise in prime rents (up 13.1%) and North

America the weakest (down 0.7%)

Prime rents are rising strongly in many emerging markets, but this growth is being overshadowed by weakening rents in some of the world’s more established financial centres such as Hong Kong, New York and London.

Luxury rents in Dubai, Nairobi and Beijing rose by 18.3%, 13.9% and 12.3% respectively in the

year to March. 

By comparison, Hong Kong, New York and London saw prime rents fall by 2.3%, 2.6% and 3.1% over the same period. In this second group of cities, the rental markets have suffered as relocation budgets for executives have been trimmed during a period of weaker financial sector performance.

Despite the slower rate of growth this quarter, the index, which tracks the performance of

luxury lettings markets worldwide and which is increasingly influenced by corporate and

expatriate demand, has now risen for 15 consecutive quarters and stands 20.3% above its low in Q2 2009.

Global mobility is on the rise as companies look to plug their skills gap but the latest figures suggest it is increasingly a west to east shift with many multinationals relocating a growing  a portion of their key talent to growth markets in Africa, China and the Middle East.

A regional breakdown of rental performance confirms this trend. The Middle East, Africa and Asia saw average growth of 13.1%, 7.0% and 3.1% respectively in the year to March.

Prime rents in Europe and North America fared less well, recording average growth of 0.9% and -0.7%. Here, salaries are failing to keep pace with inflation and the economic recovery remains in a fragile state.

With the US jobs market picking up and tentative signs of improving business sentiment in the Eurozone we may see rents strengthen in New York and potentially London in the second half of 2013. However, we expect the emerging markets to continue to top the rankings as established industries in Europe and the US look to tap into new world markets.

Knight Frank Prime Global Rental Index, percentage changes over 12-month, 6-month, 3-month period

1 Dubai Middle East 18.3% 10.1% 3.5%

2 Nairobi Africa 13.9% 7.5% 2.2%

3 Beijing Asia Pacific 12.3% 4.4% 1.8%

4 Tel Aviv Middle East 7.9% 5.4% 3.6%

5 Zurich Europe 6.3% 3.1% -1.5%

6 Guangzhou Asia Pacific 3.1% 1.0% 0.5%

7 Shanghai Asia Pacific 3.0% 0.7% 0.5%

8 Geneva Europe 2.8% 2.8% 2.8%

9 Singapore Asia Pacific 1.9% 1.5% 0.8%

10 Toronto North America 1.2% 0.8% 1.2%

11 Tokyo Asia Pacific 0.7% 1.6% -0.2%

12 Cape Town Africa 0.0% 0.0% 0.0%

13 Hong Kong* Asia Pacific -2.3% -0.7% -5.1%

14 Moscow Europe -2.6% -1.1% 0.1%

15 New York North America -2.6% -6.5% -6.6%

16 London Europe -3.1% -1.6% -0.3%

Global house prices rise 6.6%

House prices across the globe rose 6.6% in the year to March, the highest rate of growth since Q2 2010. 

Key points:

• The Knight Frank Global House Price Index rose by 2.0% in the first quarter of 2013 and by 6.6% over a 12 month period

• Hong Kong recorded the largest rise on an annual basis (up by 28%) while prices in China rose the most on a quarterly basis (up by 10.7%)

• Greece recorded the largest annual fall in mainstream prices for the third consecutive quarter, declining by 11.8%

• The US saw prices rise by 10.2%, its highest rate of annual growth since 2006

• Europe is the weakest-performing region, mainstream prices fell by 0.3% on average during the last 12 months

Thirty five of the 55 housing markets (63%) tracked by Knight Frank’s Global House Price Index recorded an increase in mainstream property prices in the year to March.

The index now stands 14.7% above its recessional low in Q1 2009.

Property prices in all world regions, except Europe, increased in the year to March (figure 3) with the Middle East performing best, rising by 10.6% on average.

Mainstream property prices in Hong Kong and China look to be flouting the efforts of policymakers to cool their property markets; both recorded price rises in the first quarter despite a raft of measures to kerb escalating prices.

Prices in Hong Kong are, on average, 28% higher than they were a year ago and in mainland China* prices are up by 23.8% in the last 12 months (and by 10.7% in the first quarter alone).

Greece, Hungary and the Netherlands occupy the bottom three rankings this quarter having seen prices fall by 11.8%, 9% and 8.3% respectively. But Europe’s difficulties don’t end there – aside from Japan and South Korea all the countries that recorded negative growth in the 12 months to March were based in Europe.

The Dutch market, which proved resilient in the aftermath of the financial crisis, is now starting to flag. Prices fell by 8.3% in the year to March driven by rising household debt and growing unemployment.

That said, there is some good news in Europe. Ireland has rid itself of double-digit price falls. Prices fell by 3% in the year to March, compared to a 16% decline a year earlier.

The UK’s property market is also improving. Here, prices rose by 0.2% in the year to March and stand 8.9% above their low in Q1 2009.

Beyond Europe’s shores, the South Africa and the US are performing strongly. Prices rose by 11.3% and 10.2% respectively in the year to March, up from -3.2% and -1.9% a year ago.

South Africa’s momentum is linked to an increasingly wealthy middle class who are tapping into the rising confidence of the wider African continent, keen to get on the property ladder.

In the US, prices have now risen for 12 consecutive months boosting consumer confidence which hit a five year high in