What are the most expensive cities in the world?
In the last few months, Century 21's managers have been focusing on an exercise. They wanted to know how much space can customers purchase in major capitals and cities for an investment of $300,000. They made some research and finally, on the 24th October in Paris, they presented the results for 30 countries.
The comments around these results were broad, especially between real estate agents that are active in those markets.
Study overview
The Century 21 study is not exhaustive. It provides data only on 30 cities, and countries where the network is present. On the other hand, it relies only in its own transactions. In this study we are not able to know the panorama of cities or countries such as Hong Kong or Monaco, that would surely be among the most expensive.
On the other hand, we were not able to know the reality for areas like Africa, except for South Africa, most Gulf countries, Israel, India, Italy, Switzerland, Brazil, Scandinavian countries, and Russia.
How much space can customers purchase in major capitals and cities for an investment of $300,000?
As a real estate professional, you may be surprised that some data that does not match your own transactions.
However you can use this study as a basis for international comparison if a customer asks you what he can buy abroad with $300, 000. You will also see that several Century 21 local officials have reported the highest prices achieved in the cities where they work. Let's have a look on the results.
Again, this estimate may usefully to the disclosure of your real estate activity. We hope you can use it and cross this data with your own.
New York and San Francisco are the most expensive places
It is not Washington, the capital, the most expensive city in the United States. The cities that are winning this marathon, are New York and San Francisco.
New statistics telling us that in New York the number of properties for sale is such that we anticipate a cap on rising prices." He also points out that given the tax measures, "a lot of our successful clients are starting to move to other states, especially Florida. Nick Bailey, President & CEO of Century 21 Real Estate LLC
In South America prices are lower
In South America, prices are mostly downward or stable. They are similar to prices in Central America but there are price different price ranges.
For example, with $300,000 in Buenos Aires, a consumer can buy a 100 m2 apartment. In Colombia, in Medellin, it is possible to buy an apartment of 212m2. On the other hand, in Bogota, the maximum price is around $2,000 per square meter, and in Cartagena it is $3,000.
As usual, in touristic places like Mexico, Cancun, San Miguel Allende, Porto Vallarta, Los Cabos, the average price exceeds those of Mexico City. Prices in these resorts are between $1,800 and $2,500 per meter square, compared with less than $1,500 in Mexico City. But in Mexico City, the highest prices can reach $5,000 and investors can find yields of nearly 10%.
What's happening in Europe ?
Europe has been one of the main focus for real estate buyers. It's prices have been increasing and it is already the continent that gathers the highest prices. Let's have a look on the most interesting cases.
Portugal presents a remarkable growth in price
In Portugal, Century 21 highlights a remarkable growth in price, specially in Lisbon and Porto.
For the average income of a Portuguese, these prices are increasingly unaffordable. However they remain accessible for international customers. Ricardo Sousa, CEO of Portugal and Spain.
But who is buying in Portugal?
French buyers are the most representative group of foreign buyers in the country. That happens due to the non-habitual resident tax status (RNH), which allows retirees to be exempt from tax for 10 years.
Today, it is estimated that more than 30,000 French residents live in Portugal, but only half of them have registered in the French Consulate. It is important to state that in the beginning, they were mainly buying in big cities, such as Porto and Lisbon. They first invested in properties with prices around $500,000. However this is changing.
Today the budget does not exceed $300,000, and the French go to secondary markets. They explore the country, buy in historic cities, and renovate old properties. They often have a main residence in Portugal, and two or three others as investment. The highest prices are around $9 000 per square meter in Portugal and $12,000 in Spain. Ricardo Sousa, CEO of Portugal and Spain.
Spain reached $3,750 Million in the 3rd quarter of 2018
In Spain, as in Portugal, the market is really active. The volume of all direct real estate investments (offices, warehouses, hotels, retail and housing), reached $3,750 million in the third quarter. This means an increase of 84% compared to the same period of the previous year.
Barcelona is the only major Spanish city where prices have not changed for more than a year. This happened due to political uncertainties. In fact, a study by Barnes shows that there are new parameters likely to revive the machine.
The change of the Spanish Prime Minister has relaunched negotiations and contacts between Madrid and "realistic" nationalists. Also, the recent public political disagreements between the two main Catalan nationalist formations should favor negotiations with the Spanish state.
We remind you that the majority of Catalans want an agreement with the central government. Having this in mind, Barnes predicts fast and very sensitive a rise in prices in Barcelona. There will be a rise of 10%, or even 20% in the high-end in less than 3 months, as soon as they announce the agreement.
Belgium prices are around $3,200/M2
In Belgium, Brussels prices are around $3,200 per meter square. They are 25 to 30% more expensive than other cities. But there are neighborhoods around Brussels and cities like Löwen, Ghent, Bruges where prices can reach $10,000 per square meter.
In the small coastal town of Knokke-le-Zoute, the demand is such that one can reach $30,000.
And what about Asia?
Asia is a very interesting case. The president of Century 21 France, Laurent Vimont, emphasizes a remarkable coherence. Indeed, with $300,000, foreigners can buy about the same surface, 50 to 70 square meters, in different cities such as Bangkok, Tokyo, Osaka, Taiwan, Beijing or Shanghai.
Japan is being influenced by the Olympic Games 2020
In Japan, two major factors impact real estate prices. The first is a phenomenon of anticipation towards the 2020 Olympic Games.
This has raised prices by 30% and up to 50% in the central part of Tokyo. Tomoo Hida, manager of Century 21 Japan.
The second factor is the population decline due to the effect of aging. Studies indicate that Japan could lose half of its population by 2050. This does not prevent foreign funds from continuing to flow.
Real estate has become so expensive in Tokyo that owners who had invested in 2012 to speculate on an increase related to the Olympics, are now selling to cash in the capital gain. Rising prices in Tokyo have affected cities like Osaka, Nagoya, Fukuoka, and the Fushu Islands where prices are rising.
The price differences in China: Megacities Vs. Big Cities
In China, there are huge differences between megacities and big cities in the interior. The average price in Beijing is 30,000 "renminbi" (or CNY, Chinese yuan), or about $3,800. Shanghai is a little more expensive and presents values of 50,000 CNY ($6,300). In Guangxi province, a city like Nanning, which still has more than seven million people, will be ten times cheaper than Beijing.
Note that in China, there are very few foreign investors due to regulatory restrictions. To be able to buy in China, a foreign buyer must have worked there and paid taxes for 3 years, and it needs to be primary residence.
Government taxes have slowed down the market in Thailand!
In recent years, following the introduction of new government taxes to cool the market, Thailand has experienced a kind of real estate recession.
The price of the capital is the double when compared with secondary cities, and quadruple when compared to the cities that are part of the top 3. This declining domestic demand, as a result of tax measures, has led to a decrease on sales. In Thailand the number of transactions passed from 40,000 to 20,000 per year. However the interest in Thailand still exists.
Given the importance of tourism, there is still a considerable volume of foreign buyers. Currently, in Bangkok, the price per square meter can go up to 20,000 EUR for new projects in upscale neighborhoods. David Dennison, owner of Century 21 Thailand.
Cambodia is a fast-growing market
Cambodia and in particular Phnom-Penh are fast-growing markets. In fact, 80% of buyers are Chinese investors who buy whatever the price.
In the upscale part of Phnom Penh where there are large avenues, prices reach $10,000 per square meter.
The Chinese are turning it into a mini-Macao. Vat Kuy, CEO, Chairman of Century21.
About the Author:
Gilles Lockhart is an independent journalist with more than 20 years experience.
He is an expert in the real estate business, and he was one of the contributors of the book Immobilier: les clés pour Réussir son Investissement à L'International. Currently, he collaborates with ListGlobally, to bring you the best insights on international real estate business.
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