Luxury real estate costs are on the rise, particularly across Asia.
A new report released by international property consultancy, Knight Frank, revealed that the price of prime real estate — or the top 5 percent of the industry value-wise — climbed by an average of 4.6 percent during the first quarter of 2021. That marks the largest quarterly growth since Q4 2017.
Three Chinese locations led the charge: Shenzhen registered a 19 percent increase year over year, while Shanghai and Guangzhou both saw 16 percent price increases in precisely the exact same timeframe. Seoul arrived at No. 5 on the ranking with a 14 percent change.
“Despite the introduction of stricter curbs on China new home sales in January 2021, buyers’ enthusiasm continues to persist as the low inventory stoked a fear of missing out among homebuyers,” Victoria Garrett, head of APAC residential for Knight Frank, said in a media release.
The sole non-Asian city to rate among the top five cities is Vancouver, Canada (No. 4 to the ranking), where prime real estate prices rose by 15 percent year over year. The highest cost change among American cities was in Los Angeles (No. 8), in which costs rose by 12.6 percent from Q1 2020 into Q1 2021.
Other cities saw costs soften in this same time frame, according to the report. Among the 46 global cities tracked by Knight Frank, New York City saw the largest cost dip. Costs dropped by 5.8 percent year over year.
Shenzhen: Transformation from Fishing Village into Unaffordable Metropolis
Thirty years ago, Shenzhen was a fishing village.
Now a city supporting 12.5 million people, Shenzhen attracts young entrepreneurs and is sometimes known as the “Silicon Valley of Asia.”
The town borders Hong Kong, which has reigned as the world’s priciest city to lease a luxury flat. Its proximity to Hong Kong — the locations really are a 15-minute bullet-train-ride apart — has led some land developers to watch Shenzhen as a cheaper housing counterpart.
However, as Bloomberg CityLab reported December, Shenzhen is facing its own property problems. It has China’s greatest real estate prices and lowest homeownership rates. The cost of an apartment in Shenzhen, according to Bloomberg, is 43.5 times a resident’s average yearly income.
Shanghai, meanwhile, was recently named the most expensive city in the world for the ultra-rich in Julius Baer’s 2021 wealth and lifestyle report. The expense of housing in the city is 36.1 times higher compared to the resident’s average annual earnings, per Bloomberg. And at the Economist’s 2020 Worldwide Cost of Living Report, which premiered in December, ranks Guangzhou, Shanghai and Shenzhen as some of the highest-cost-of-living cities in the world.
