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Luxury Homes Tagged As Safe Assets Despite Projections Of Market Slowdown In 2019

Hong Kong Skyline | Photo Credit: Wikipedia

Would it be wise to bet on luxury homes this 2019? It appears that doing so will at least lead to a safe investment zone given prices in the segment have been predicted to become more affordable, and therefore attractive to buyers. Overall, prime property remains a safe asset, a new report said.

The luxury market, in terms of home prices, is still in the growth trajectory but a slowdown is likely to happen. In the latest outlook released by real estate consultancy firm Knight Frank, price movement in the segment is proving to be on a crawl, the most sluggish pace observed over the past six years.

Such a trend has been suggested by Knight Frank’s Prime Global Cities Index, which monitors the movement of luxury homes prices in 43 cities around the world.

Notwithstanding the emerging market slowdown, the same report brushed aside reasons for concern and characterised the luxury segment as “a distinct asset class, a safe asset viewed by the wealthy as a viable alternative to government bonds.”

Causes Of Slowdown

Premium homes will predictably cost less mainly due to the increasing volume of supply and in some cases, the geopolitical situation in a specific location. Also, the Knight Frank report suggested that since finance costs have been moving north and market regulatory measures have created some form of pressures to the industry, prime prices will likely dip a bit.

In addition, the speculative money that once fuelled price growth in the segment has practically dried up, the industry research stated.

Many developers too have shifted their attention on mid-range and affordable housing projects, indicating that the return of liquid funding for high-end development is not happening anytime soon. At least in 2019, the observed trend is seen to continue as the majority of house buyers tend to prioritise budget purchases and hold off on luxury acquisitions.

Where Premium Homes Cost Less

The index furnished by Knight Frank showed that cities like Singapore will keep the level of premium home prices seen in 2018 while the market settings in effect on key European cities like Paris and Berlin will likely induce price growth of up to six per cent.

In Hong Kong, however, luxury homes will experience price retreats reaching a high of 10 per cent, and the same goes for the Indian city of Mumbai, where the slowdown is set at five per cent. The prime home market softening will also be felt in Dubai, where prices will dip by 2.5 per cent.