The European luxury home market has its share of hotspots that continues to attract global investors. In a report in the Wall Street Journal, five of Europe’s most popular locations are Berlin, Dublin, Lisbon, London and Paris.
Property values for the city have been increasing over the past three years with warnings in 2017 by the property research group Empiraca that at its continued pace affordability had become unsustainable, with the outlook expecting a market correction to bring prices down.
Prices remain high due to the lack of luxury home stock and a growing population. In its analysis
Ziegert estate agents reported that average prime property prices for the top 5% of the market had increased 27% between June 2016 and June 2017.
Sven Henkes, chief operating officer of Ziegert on a possible price correction said:
“It is the capital city of one of the strongest economies in the world, but the price level is still relatively low compared to other capital cities like London. I am very confident.”
Berlin has often been mentioned as one of the world’s most livable cities with its transport links and quality of life.
Mr. Henkes expects the market to project annual growth of 5% to 6%.
“We will still have the growth but the market is becoming more mature. We will see growth, not boom.”
In the period of October 2016 and October 2017 the Central Statistics Office reports average residential prices increased by 11.6%. Since the recession Dublin prices have spiked by 86% but still remain at 22% below the values in 2007.
The most popular location for the luxury home sector is the Dublin suburb of Ballsbridge where prices have risen 10% year over year for property valued at $1.2 million and under. For home price levels of €1.2 million to $2.4 million have seen prices rise 5% and 7% respectively. Values of $3 million and upward have seen increases from 3% to 5%.
Like Berlin, a shortage of luxury residences in Ballsbridge has helped to increase home values.
Simon Ensor, chairman of estate agent Sherry Fitzgerald Residential says for 2018:
“I don’t see a huge push on prices but there will be some modest growth.”
Over the years the popularity in the Lisbon market increased when in 2012 the Portuguese government began offering residence permits for non-European nationals. Low taxes and interest rates have helped to increase house prices by 35% between 2012 and 2016 according to statistics from Confidencial Imobilario.
Office for National Statistics for Portugal reports that the average price per square foot in Lisbon increased 15% to $253 per square foot from June 2016 to June 2017.
The locations of Santo António and Misericórdia have the highest prices per square foot at
$375 per square foot and $369 per square foot respectively, a year over- year growth of 46% and 38%.
Julian Walker, director of InternationalPropertyForSale.com:
“While this growth is significant, prices are low compared to prime real-estate quarters of other major European capitals.”
The real estate market and in particular the luxury sector has become almost legendary for price growth and construction in any number of areas of London. With Brexit and economic worries, the market has seen a decrease of prices by 5.2% between September 2016 and September 2017. From the period of September 2015 and September 2016 prices tumbled by 6.8% according to an analysis by Savills.
Not all of the news for the luxury sector is negative.
In 2017 Aylesford International sold a home at the Carlton House Terrace near Buckingham Palace for $62 million. The buyer was from overseas and the house will require a full renovation for living.
The outlook for 2018 by Savills is for prices to remain flat with growth returning in 2019 at a projected rate of 2% and for the next five years a compound growth of 20%.
The rebound of the Paris Luxury sector is credited to the policies of President Emmanuel Macron and continued low interest rates. The average price for a city apartment has increased 5.5% over the last year to $1,042 per square foot with price increases in all all 20
Arrondissements of the capital.
The Knight Frank forecast for 2018 has Paris with residential price increases by 9%.
Kate Everitt-Allen, head of international residential research said:
“The French capital is back on the radar of global investors, in particular, those from the U.S., the Middle East and Europe.”
By Kevin Murphy: www.kevinmurphy.london