In 2014 real estate markets in Europe still move in different directions. The starting point, the crisis of six years ago, still does not let metropolises stabilize. Now premium housing prices will grow most of all in Dublin, London and Vienna, and they will fall mostly in Italian cities. How things are going in other cities of the continent, where billionaires move to, and how many elite square meters you can purchase for €1 million: in the material on ee24.com.
Knight Frank’s European Cities Review which assesses the state of real estate markets in 14 key cities of Europe, is quite controversial. This year, each metropolis behaves differently, and instead of talking about strengthening or weakening position of Europe as a whole, we should consider each city separately.
Why should places where the rich invest their funds be interesting for "simple" buyers? For example, those who barely managed to save money for a property in Bulgaria or Spain? Because wealthy investors are surrounded by crowds of experts and advisers and, in fact, their choice shows us what regions will be promising tomorrow. Although in the same city prices for elite and ordinary housing do not change equally, these cities, preferred by billionaires, have already been defined, so one should have a closer look at them.
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Barcelona: 8 times cheaper than Monaco
Among 14 most attractive cities, average prices for luxury properties differ eightfold. The most expensive housing is in Monaco, where for €1 million you can purchase only 20.6 sq.m. In London and Geneva for the same amount you cannot buy more than 50 sq. m, in Paris, Zurich and Moscow this index is closer to 60 sq.m. The cheapest luxury real estate in Europe is located in Dublin (142.9 sq.m), Madrid (166 sq.m) and Barcelona (166.7 sq.m).
In Monaco, luxury housing is sold for € 30,000-40,000 per sq. m., in London for € 26,000-32,000 per sq.m. Real estate in Paris is twice cheaper, and in the Spanish capital it costs € 5,000-9,000 per sq.m. Moscow is in the middle of this list: elite square meter costs € 14,000-19,000 and the most prestigious apartments in the Russian capital are in Ostozhenka.
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"Safe haven" gives way to the "second tier"
Real estate in London, Vienna and Munich in recent years is more and more considered as a "safe haven" and a place for capital maintenance. It is in Mayfair, London, in the first district of Vienna and in Maxvorstadt, Munich where billionaires from countries with developing economies buy expensive houses in order to save their fortunes and at the same time get closer to elite class of Western Europe.
Another issue is how long this trend will go on. After the Eurozone economies are out of recession, wealthy buyers may pay attention to cities of the "second-tier" - Seville instead of Barcelona, Florence instead of Rome. Real estate prices in the "first tier" are high and their growth potential is almost exhausted.
Madrid
On the other hand there are Dublin and Madrid, where prices and sales dropped significantly. Of course, they are not the "second tier", they are true, but less successful leading cities. Incidentally, property in Dublin and Madrid is getting more expensive now most of all, recovering crisis losses. They are leading cities according to real estate markets recovery. By March 2014 luxury property prices in these cities fell respectively by 24.6% and 5%.
Prices of prime real estate changed in the following way year on year:
| |
1Q 2014 |
4Q 2009 |
| Dublin |
25% |
–25% |
| London |
7% |
6% |
| Vienna |
6% |
5% |
| Monaco |
6% |
–15% |
| Munich |
5% |
2% |
| Madrid |
5% |
–10% |
| Rome |
0% |
2% |
| Paris |
0% |
–12% |
| Mosciw |
–1% |
–6% |
| Zurich |
–2% |
0% |
| Barcelona |
–4% |
–7% |
| Florence |
–5% |
–6% |
| Venice |
–5% |
–7% |
| Geneva |
–7% |
–8% |
Geneva
Do important people live in important cities?
It is pleasant to know for everyone that his city is selected by UHNWI people as native. It is a measure of prestige, comfort and great prospects. According to forecasts, in 2013-2023 the proportion of superrich will increase in Munich and Moscow most of all. In both metropolitan cities there will be more than 1,000 residents with a fortune over $30 million. The growth will not be as strong in London, Rome and Paris – there are not so many wealthy people: high base effect.
Real Estate in Munich requires a separate discussion. For 10 years, the number of super-rich in the city increased by a record of 48%. Vitaly Chupin, managing partner of Campus Consulting GbR, comments for ee24.com: "Munich is a pretty little town, where only a limited area is provided for construction. Only a few large projects are constructed at the same time. It does not even cover the demand of townspeople, let alone foreigners. Demand dominates on the market, and it is extremely difficult to find good offers." Buying real estate in Munich opens all the ways: northward to Germany, southward to the Alps, eastward to Russia, westward to France.
| |
Increase in the number of UHNWIs from 2013 to 2023 |
Number of UHNWIs to 2023 |
| Munich |
48% |
1,651 |
| Moscow |
33% |
1,096 |
| Vienna |
26% |
483 |
| Barcelona |
23% |
533 |
| Geneva |
21% |
1,394 |
| Madrid |
21% |
651 |
| Florence |
21% |
165 |
| Venice |
21% |
104 |
| London |
17% |
4,940 |
| Zurich |
16% |
1,521 |
| Rome |
14% |
1,081 |
| Dublin |
13% |
413 |
| Paris |
10% |
1,656 |
Dublin – 48%
Vienna – 26%
Zurich – 26%
Paris – 25%
London – 22%
Moscow – 18%
Madrid – 18%
Barcelona – 12%
Munich – 7%
Munich
Strangers in the city
It is strange to expect that all Moscow investors will invest in local mansions and Paris investors - in apartment with Eiffel Tower view. The world today is a movement of funds, especially when these funds are large. More than half of luxury real estate buyers in Barcelona, Venice and Monaco are foreigners. About half of transactions with foreigners are made in Florence and London. And where is the smallest number of them? That's right: in Moscow (10%), where English is not on the second place after the Russian language
Even in Moscow the most frequent foreign clients are citizens of the CIS, followed by the French and the British. The most active buyers of expensive real estate in Monaco and Munich are the Russians; in Geneva and Venice – the French; in Rome, Florence and Barcelona – the British. Paris is "invaded" by the Arabs from the UAE, Madrid – by the Venezuelans, and London – by the Chinese.
| |
#1 buyers |
#2 buyers |
#3 buyers |
| Barcelona |
UK |
USA |
France |
| Venice |
France |
UK |
Germany |
| Vienna |
CIS |
Germany |
Saudi Arabia |
| Rome |
UK |
USA |
Northern Europe |
| Madrid |
Venezuela |
Colombia |
UK |
| Munich |
Russia |
Saudi Arabia |
UAE |
| Florence |
UK |
USA |
Northern Europe |
| Monaco |
Russia |
Italy |
Belgium |
| Dublin |
Singapour |
UK |
Malaysia |
| Geneva |
France |
Russia & CIS |
UK |
| Zurich |
Germany |
Russia & CIS |
UK |
| Paris |
UAE |
Singapour |
USA |
| London |
China |
Russia |
Singapour |
| Moscow |
CIS |
France |
UK |
Text: Alexander Fetyukov, ee24.com