Holiday homes in upmarket coastal hotspots around the world have been hit hardest by the global property recession, reveals the 2010 Wealth Report by international property consultants Knight Frank and Citi Private Bank. Needless to say, holiday homes in upmarket destinations on the Spanish coast didn’t escape the punishment, with prices in Mallorca down 17% last year.
To help us understand what is going on, Knight Frank segment property markets by region and category. “Coastal and country second home locations saw prices fall by 14% and 11.9%, respectively,” explains Liam Bailey, head of residential research at Knight Frank. “European ski resorts were slightly more resilient – falling by 12%. But prime city locations were much healthier, posting an average rise of 0.4% over the year.”
By region, Asia Pacific did the best, up 17%, followed by Africa +10.7%, and Latin America +7.8%. In negative territory were North America -7.7%, Europe -12%, Caribbean -13.3%, and the Middle East -27.5%. Globally, property prices tracked by Knight Frank fell by 5.5% last year.
At the top end of the scale, prices rose by 52% in Shanghai, 47% in Beijing, and 40.5% in Hong Kong. At the bottom, they fell by 22% in Palma de Mallorca, 25% in Dublin, 30% in the Western Algarve, and 45% in Dubai.
Though some parts of Asia did spectacularly well, distress is still a big part of the overall picture. “In last year’s report we revealed that 41% of the prime markets we tracked had seen annual price falls; this year the figure is 73%,” says the report.
“Three years into the global housing market downturn, and at the tail end of the world’s worst recession for 70 years, we might have expected to see the beginning of a slow and measured property recovery. Instead, on the one hand, we have strong growth in London and huge uplifts in key Asian markets. On the other, prices were still falling last year in three-quarters of the locations featured in our Prime International Residential Index.”
For holiday homes, the Knight Frank report focuses on select regions that tend to attract high-end buyers, like Mallorca. Arguably the situation was even worse last year in Spain’s mass-market destinations like Murcia and the Costa Blanca.
Something positive to say about Spain
But there was, at least, one positive tip for Spain in the report.
In the market-by-market insight section where Knight Frank’s regional experts round up their markets and offer their recommendations for 2010, James Price, head of international residential development at Knight Frank, gives the following advice:
“Focus on the very best prime locations (Cote d’Azur, Swiss and Italian Lakes, prime Tuscany and west coast Barbados). Transactions may be down, but values have not dropped significantly. For growth potential, look to locations with international interest and good transport and supporting infrastructure. For example, Catalunya (Spain), Silver Coast (Portugal) and Ligurian Coast (Italy).”