Prime Global Forecast 2021 - Prime Price Forecast Risk Monitor - Knight Frank
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Prime Price Forecast Risk Monitor Future Trends
Prime Global
knightfrank.com/research
Forecast 2021
P R I M E G LO B A L F O R E C A S T 2 0 2 1 P R I M E G LO B A L F O R E C A S T 2 0 2 1
WHERE NEXT?
There has been strong
Against a tumultuous backdrop, Kate Everett-Allen assesses the ups and sales interest, but the top
THE IMPACT OF
downs of prime property markets in 2020 and beyond end of the market has THE PANDEMIC
been affected by many
24%
international buyers not
being able to travel.
EDWARD DE MALLET MORGAN, MONACO
of respondents in our Global Buyer Survey said they were more
likely to move in the next 12 months due to the pandemic
F rom health to economics, 2020 cities, was rising at a rate of 1.1% per incomes and companies, whilst keeping reconsider their property requirements in Are prime sales
back to
saw the world upended. Our latest annum, by the end of September 2020 the borrowing costs near record lows. That light of the pandemic.
pre-pandemic
data however, suggests prime property rate had climbed to 1.6%. said the response of prime housing A lack of prime supply is cushioning
levels?
No
markets were largely resilient. Underpinning the resilience of markets has not been uniform. prices in some markets (Singapore,
A year ago, Knight Frank’s Prime
Global Cities Index, which tracks the
housing markets are the vast stimulus
packages that governments and central
Some markets have had a helping hand
from policymakers – London and Mumbai
Sydney and Los Angeles) while others
are benefitting from their safe haven
Yes
movement in prime prices across 45 banks have employed to support are enjoying stamp duty holidays, while credentials (Geneva, Auckland). Berlin, Geneva, Lisbon, Auckland, Buenos Aires,
London, Los Angeles, Cape Town, Dubai, Hong
others such as Vancouver and Miami are The story isn’t all positive, some cities
Miami, Paris, Singapore, Kong, Madrid, Melbourne,
seeing a flurry of sales activity as residents were left reeling from the economic fallout Sydney, Vancouver Monaco, Mumbai, New York,
of lengthy and stringent lockdowns (Cape Shanghai, Vienna
Prime price growth resilient in the face of the pandemic
Index aggregate - 45 cities (annual % change) Town, Madrid) not to mention the scale of
the pandemic (Buenos Aires).
4.5% The prime central London Clearly, there are challenges ahead.
4.0%
market recovered strongly Europe is locking down for a second
3.5%
3.0%
over the summer, and is time and most fiscal stimulus measures
2.5% overdue a period of house are set to taper off in early 2021. The
2.0% price growth. It will also concern for investors is that rents are By the end of 2020, how will prime sales volumes
1.5%
benefit from a wave of declining in several key cities, due in part compare with 2019?
1.0%
0.5% international demand as to the absence of international students, No. of cities
0.0% travel and quarantine rules but also due to a surge in supply as
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q1
2020
Q2
2020
Q3
2020
are relaxed. landlords switched from holiday lets to
TOM BILL, LONDON long-term rentals. 6 2 4 1 1 0 7 1
Source: Knight Frank Research We shouldn’t forget taxation. All eyes
are now on government plans to replenish
public coffers. From proposed wealth tax
changes (Spain, Canada) to higher capital
gains taxes (US and UK), the tax landscape 20%-49% 9%-20% 0%-9% Same 0%-9% 9%-20% 20%-49% 50%+
looks set to shift.
KEY PRIME MARKET DRIVERS IN 2020/21 This year, as well as presenting
our price forecasts for 2021 (page 4),
our global research teams assess the
impact of the pandemic on their markets
(see panel right) and assess the prospects
45% 36%
OF CITIES OF CITIES
45% OF CITIES
for demand, supply and sales in their say prime sales have seen a city are seeing a large volume of
markets (page 5). were already back to exodus with the suburbs expats return these include
Finally, on page 6 we look at the risks pre-pandemic levels in the most popular location Auckland, Cape Town,
PA N D E M I C - S U P P LY CURRENCY BUYING LOW INTEREST TA X C H A N G E S FISCAL Q3 2020 for those relocating London, New York, Singapore,
FUELLED S H O R TA G E P L AY OPPORTUNITY R AT E S STIMULUS and opportunities that lie ahead and
Stamp duty Sydney, Vancouver
DOMESTIC
DEMAND
In some cities Strong USD, weak Several years of The number of holidays Mortgage holidays highlight eight trends set to influence
GBP and at the weak price growth economies with and furlough
Change of location prime residential markets in a post- Source: Knight Frank Research
start of 2020 weak in first tier cities negative rates is set schemes
or larger property AUD and NZD to rise pandemic world (page 7).
2 3P R I M E G LO B A L F O R E C A S T 2 0 2 1 P R I M E G LO B A L F O R E C A S T 2 0 2 1
THE FORECAST
In 2021, we expect 20 of the 22 cities to see prices remain flat
Knight Frank’s analysts provide their prime residential price forecasts for
or increase, a slight reversal of the trend seen in 2020 when we
2021 and assess future market drivers
expect nine cities to end the year with lower prices.
I
n 2021, we expect 20 of the 22 Shanghai and Cape Town lead the firm market fundamentals, these include Local Tax (SALT) deduction which led to the market has already picked up in 2020 as residents looked to upgrade
cities to see prices remain flat or forecast for 2021 with annual price London, Sydney, Paris, Berlin and Madrid. higher taxes in states such as New York where it left off prior to the pandemic to larger properties with more outdoor
increase, a slight reversal of the trend growth of 5% forecast. New York is also expected to register and California. (Shanghai) or because prime prices space, these include Auckland, Vancouver,
seen in 2020 when we expect nine cities Three broad groups look set to emerge an improvement, largely because Secondly, there are some markets were accelerating and are expected to Geneva, Los Angeles and Miami. Here,
to end the year with lower prices. in 2021. Firstly, those markets where excess inventory is being absorbed and where the pandemic will have little do so again due to strong investment in prime price growth will moderate slightly
In 2020, prime prices across the 22 prime prices are expected to rebound, buyers are recognising its relative value. impact on prime pricing, in some cases infrastructure (Lisbon). on the back of a frenetic 2020, but still
cities are, on average, expected to remain assisted by low interest rates, pent-up Furthermore, a Biden administration because growth was already weak and Finally, there are a handful of markets remain in positive territory.
static, before rising by 2% in 2021. demand, tax holidays or because of could lead to a reversal of the State and will remain so (Buenos Aires), because that unexpectedly saw activity surge
PRIME GLOBAL 2021 EVENTS Past, present and future
Prime price performance - 22-city average
FORECAST 2021
Annual % change (Dec 20-Dec 21) UK
The UK leaves the European Union on
1 January 2021 2%
1%
Berlin
3.0%
Paris 0%
New York 3.0%
0.0% T O K YO
The postponed Summer Olympics will
Vancouver Dubai 2019 2020 2021
Vienna take place from 23 July 2021 and the
3.0% -2.0%
2.0% Paralympics from 24 August 2021
London Shanghai
FUTURE DIRECTION
4.0% 5.0% How will demand, supply and sales volumes change in 2021?
Mumbai DUBAI
Lisbon 0.0% Rise Significantly Rise Slightly Remain the same Fall Slightly Fall Significantly
4.0% The postponed Expo 2020 will now
Hong Kong start on 1 October 2021 and last until PRIME PRIME PRIME PRIME PRIME PRIME
Monaco DEMAND SUPPLY SALES DEMAND SUPPLY SALES
Los Angeles 3.0% 0.0% 31 March 2022
3.0% AUCKLAND MELBOURNE
Miami Geneva
4.0% Madrid 3.0% BERLIN MIAMI
3.0% BUENOS AIRES MONACO
GERMANY CAPE TOWN MUMBAI
Singapore Sydney Angela Merkel will retire as Germany's
3.0% 3.0% DUBAI NEW YORK
Chancellor in September 2021, her
successor will be announced in early 2021 GENEVA PARIS
HONG KONG SHANGHAI
LISBON SINGAPORE
Melbourne
1.0% LONDON SYDNEY
Buenos Aires Cape Town GLOBAL LOS ANGELES VANCOUVER
-8.0% 5.0% Auckland The UK will host the UN's Climate Change
4.0% MADRID VIENNA
summit (COP26) in Glasgow from 1
November 2021 Source: Knight Frank Research
4 5P R I M E G LO B A L F O R E C A S T 2 0 2 1 P R I M E G LO B A L F O R E C A S T 2 0 2 1
RISK MONITOR FLORA HARLEY
TRENDS TO MONITOR
ASSOCIATE, GLOBAL
Despite uncertainty reaching new heights in 2020, there are opportunities on the horizon in the RESIDENTIAL RESEARCH
Below we highlight some of the trends set to influence prime property
form of currency shifts, investment visas and property tax holidays. We asked our global research
teams to give us their take on the biggest risks to their prime residential markets
markets in 2021 and beyond
10 = Most influential, 0 = Least influential Silver Linings?
01.
Even before the pandemic took its toll we
within driving distance and the line resorts, be they ski or sun locations,
were nearing the end of the economic cycle,
10 Covid-19 hit reset and 2021 could mark a
between primary and secondary from Aspen to Cannes, are seeing
residences becomes blurred. demand strengthen.
10 wave of renewed growth. ESG TAKES OFF
As our Risk Monitor shows the pandemic Green and ethical investing is set to
THE PANDEMIC AND THE
GOVERNMENTS’ RESPONSE
9
and governments’ response to it, combined
with economic performance remains at
the forefront. The widespread roll-out of
filter all aspects of global property
markets as the pandemic and a
Biden Presidency push purpose-led
04. 07.
DIGITAL NOMADS DEBT HARDER TO COME BY
an effective vaccine would be the biggest investment up the global agenda.
ECONOMIC PERFORMANCE (GLOBAL
First Barbados, then Bahamas and Dubai, With more countries expected to join the
boost for economic recovery. Equity markets
8
02.
OR LOCAL) policymakers are acknowledging the negative rates club in 2021, finance looks
and government bond yields both jumped
global workforce has gone mobile and are set to remain cheap, but lenders are
TRAVEL RESTRICTIONS in response to Pfizer’s vaccine results,
introducing short-term visas in an effort to taking a more cautionary stance, raising
demonstrating investor sentiment. Brighter
THE BLENDED CITY boost their pandemic-hit economies. Expect loan-to-value ratios and making finance
HIGHER TAXES – INCOME, prospects are shifting preferences from ‘safe
WEALTH, PROPERTY With a five-day commute a distant more of this. costlier for highly-leveraged clients.
8 haven assets’ such as bonds and gold towards
memory, and digital working the new
opportunities that offer the potential of
05. 08.
GEOPOLITICAL CRISES (INCLUDING norm, there will be an online and offline
US/CHINA TRADE RELATIONS) higher returns, including property. We could
approach to work and our lifestyles,
see the US dollar weaken which will shift
CURRENCY SHIFTS
leading to more residential stock in city
the buying power of international investors.
centres and more retail and amenities ALTERNATIVE SECTORS A CHANGING TAX
7 However, international travel could remain
UNDERSUPPLY OF LUXURY STOCK in suburbs. From data centres to retirement homes, LANDSCAPE
limited as there will be a staggered roll-
and from healthcare to the private rented Will governments look to raise property
03.
OVERSUPPLY OF LUXURY STOCK
out of any vaccine globally and Oxford
sector, investors are widening their net taxes in a post-pandemic world to
Economics estimates it could be 2023 before
given the opportunities in the medium to replenish lost revenue or will foreign
BREXIT 7 international travel returns to 2019 levels.
long term. buyer taxes and bans be rolled back to
With the potential for a quicker return ACCESSIBLE BOLTHOLES
help attract overseas investment? The
06.
to ‘normal’ this could limit unemployment With many unable to reach their
next few months should give us some
6 and support housing markets, plus interest second homes in lockdown, and
indication as to the route governments
rates look set to remain at record lows for the others decamping for much longer
5 plan to take.
foreseeable future. The US Federal Reserve periods than usual, the location and RESORT MARKETS
has indicated it will not raise rates until at specification of second homes is set Overshadowed by escalating prices in
least 2022. to change, as many look for a bolthole prime cities since the last financial crisis,
I N F R A S T R U C T U R E & R E G E N E R AT I O N
SE L E CTE D PL ANS
BERLIN HONG KONG LISBON LONDON MADRID MUMBAI PA R I S SINGAPORE SYDNEY VA N C O U V E R
BER
Siemensstadt 2.0LinI North-West
N H O Kong
Hong N G International
KONG L Inew
The city’s SB O N Airport
Montijo LON
Crossrail's Drunning
trial O N will M A D R I of
The redevelopment DMadrid MMumbai
The Navi U M BInternational
AI Le GrandP A RProject
Paris I S (4 new S I NTransit
Mass G A PRail
O Line
RE S YQuay
Circular D NRenewal,
EY AV A underground
new N C O U V rail
ER line
Berlin: Siemens2.0
Siemensstadt Group is investing
in North-West Airport’s third runway
Hong Kong is due to
International opens in 2022
The city’s and a new
new Montijo rail-
Airport commence
Crossrail'sintrial
Spring 2021will
running and Nuevo
The Norte centred
redevelopment ofaround
Madrid Airport
The NaviisMumbai
likely toInternational
be open in trainlines,
Le 68 new
Grand Paris stations)
Project &
(4 new extensions - Circle
Mass Transit Line,
Rail Line SydneyQuay
Circular Metro City &
Renewal, tonew
A the University
undergroundof British
rail line
€600Siemens
Berlin: million and converting
Group its
is investing be operational
Airport’s in 2022
third runway is due to link between
opens Lisbon
in 2022 and aand
newPorto
rail- should be fully
commence operational
in Spring by
2021 and Chamartín
Nuevo Nortetrain station
centred will
around Airport May 2021
is due to open in 2024 Summer
trainlines, 68 newOlympics
stations) & North-East
extensions line and Line,
- Circle a rail Southwest,
Sydney New
MetroBarangaroo
City & Columbia.
to the University of British
old HQ into
€600 a campus
million for research
and converting its be operational in 2022 has been
link between mooted
Lisbon and Porto should bemid-2022
fully operational by deliver more train
Chamartín than station
10,000will
new May 2021 2024 Summer Olympics extension to Changi Airport Railway
Southwest, NewStation
Barangaroo Columbia.
old HQ intoand start ups
a campus for research has been mooted mid-2022 homes10,000
deliver during new
the 2030s
homes Railway Station
and start ups by 2033
6 7We like questions, if you've got Prime Sales Research
one about our research, or would Paddy Dring Liam Bailey
like some property advice, we Global Head of Prime Sales +44 20 7861 5133
would love to hear from you. +44 20 7861 1061 liam.bailey@knightfrank.com
paddy.dring@knightfrank.com
Kate Everett-Allen
Prime property definition: The most desirable and
Linda Chern +44 20 7167 2497
expensive property in a given location, generally
defined as the top 5% of each market by value. Prime Singapore Head of Residential (Project kate.everett-allen@knightfrank.com
markets often have a significant international bias.
Marketing, Prime Sales & Leasing)
+65 8228 8836 Flora Harley
linda.chern@sg.knightfrank.com +44 20 7861 1436
flora.harley@knightfrank.com
PR Enquiries
Astrid Recaldin
+44 20 7861 1182
astrid.recaldin@knightfrank.com
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients
Knight Frank Research worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All
Reports are available at our clients recognise the need for expert independent advice customised to their specific needs. © Knight Frank
LLP 2020. Terms of use: This report is published for general information only and not to be relied upon in any way. All
knightfrank.com/research information is for personal use only and should not be used in any part for commercial third party use. By continuing to
access the report, it is recognised that a licence is granted only to use the reports and all content therein in this way.
Although high standards have been used in the preparation of the information, analysis, views and projections presented
in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant
from any use of, reliance on or reference to the contents of this document. As a general report, this material does not
necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. The content is strictly
copyright and reproduction of the whole or part of it in any form is prohibited without prior written approval from Knight
Frank LLP. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our
registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.You can also read
