26.03.09  The Lux Report - The Luxury Lifestyle Resource, 18 March 2009

London property market dips – but still among world’s most costly cities sector?

Property in central London is the world’s second most expensive, after Monaco according to a new study. The Global Property Guide’s list of the World’s Most Expensive Residential Real Estate Markets 2009 claims that while Monaco is the undisputed leader at US$45,000 per square metre, London and Russia are pretty much neck-and-neck for second place. Property in central Moscow fetches US$20,853, with London at US$20,756. Basing its figures on the average price of a good-condition high-end used apartment, the report sees Tokyo ranking fourth, Hong Kong fifth, and New York in at number six. Amman, Lima and Santiago are the world’s cheapest, with property in Santiago fetching just US$1,221 per square metre. London residential property prices have fallen for much of 2008, while Moscow property price declines only started in the last quarter, allowing Moscow to catch up with London. Prices will continue on their downward spiral: “Central Moscow was previously quite overvalued, relative to rents and to local costs, and also given the negatives of the Putin regime,” says publisher Matthew Montagu-Pollock. “Central London was less overvalued. Monte Carlo is absurdly overvalued by the criterion of price/rent, but its main attraction is as bolt-hole for the super-rich who want no scrutiny of their assets and no taxes.” However, Montagu-Pollock reckons prospects are not good for Monte Carlo, London or Russia: “We are negative on all three – central Moscow because of its overvaluation and the reduction of confidence in the Russian economy, London because of the poor times investment bankers face (their bonuses have a significant impact on the London market), and Monte Carlo, because at the margins, even the rich cannot allow unprofitable assets to sit idle, after the pain of the last year.” International property company Beauchamp Estates points out that while Moscow prices have more or less followed London in the last quarter of 2008, London was the first to feel the downturn in the first quarter of 2008 and is optimistic that London prices will feel the effects of recovery before Moscow. While the appeal of Monaco is self-evident, Beauchamp Estate’s Gary Hersham believes that London has international appeal. “Certainly it is a much bigger market place, both to the home market and to the world market in terms of not only second homes but residential investment and indeed development.”