Hong Kong is routinely referred to as the most expensive city in the world.
Hong Kong is routinely referred to as the most expensive city in the world.

Luxury homes offer the rich a wealth of choice



It turns out the rich are, in fact, different after all. While property markets around the globe continue to struggle as the economy stutters, home values in the most exclusive locations are still rising, fuelled by the unique tastes of the world's richest people.

Prices for the most expensive properties jumped 10 per cent in 10 of the world's biggest cities in the first six months of the year. This outpaced the overall market in the same cities, according to a "global billionaire index" tracked by the upmarket estate agency Savills.

The value of billionaire properties has increased 65 per cent in the past five years, despite the global financial crisis, Savills reports.

"The performance in leading Asian cities has been nothing short of spectacular," notes the estate agency Knight Frank in a recent report. When it comes to property, billionaires operate on their own value system, which is far removed from the rationales of typical property buyers, agents say. The seriously rich are not tied to any one city and seek to buy property where they do business and see value.

Rather than look at a general market or even neighbourhoods, billionaires tend to congregate, almost forming their own clubs, says Yolande Barnes, the director of residential research at Savills.

"It goes beyond location and goes to very specific addresses and buildings," she says.

Properties such as One Hyde Park, a luxury development in London, became a hot address and attracted billionaires from around the world, even though other properties may have offered comparable luxury at better prices. In April a three-storey, 2,300 square metre penthouse in the One Hyde Park complex sold for £136 million (Dh776.6m), believed to be the most ever paid for a London home.

Hong Kong, routinely referred to as the most expensive city in the world, stands out as the most dramatic example of the phenomenon. Prices for billionaire homes now stand at £6,700 a sq foot, compared to £5,100 a sq ft in Tokyo, Savills reports. London's luxury prices are still a relatively paltry £3,090 a sq ft, even though it is attracting hordes of wealthy buyers from Asia, the Middle East and Russia.

"You have a perfect storm coming together in Hong Kong," Ms Barnes says. Not only are luxury homes rare in Hong Kong, it offers the most fashionable addresses for the billionaire club.

"These billionaires occupy small spaces in Hong Kong," adds Ms Barnes. "It's the rarest space."

Hong Kong is also perfectly positioned to take advantage of the growing number of billionaires in the world.

There are a now record 1,210 people qualifying for exclusive membership, led by the Mexican telecommunications tycoon Carlos Slim, the richest man in the world, according to Forbes magazine.

In 2008, there were 1,125 billionaires, but the number slid to 793 in 2009 during the global downturn.

But the ranks of ultra-rich rebounded last year, swelling to 1,011, fuelled primarily by growth in Asia. This year there were 332 billionaires in the Asia-Pacific region, up from 234 a year ago and 130 in 2009.

"While nearly all emerging markets showed solid gains, wealth creation is moving at an especially breakneck speed in Asia-Pacific," Forbes reports.

The US still dominates the billionaire list, but it is losing ground. About 30 per cent of Forbes's billionaire list is from the US, compared with 50 per cent 10 years ago.

Only 6 per cent of the US's billionaires are new, while 47 per cent of Chinese billionaires and 30 per cent of Russian billionaires are fresh to the list, Forbes finds.

"Before this year only the US had ever produced more than 100 billionaires," Forbes says. "China now has 115 and Russia 101."

That trend of new wealth is reflected in the billionaire property-buying trends. The new-economy cities have grown "faster because the wealth generation has been so much greater than the old-world cities", Ms Barnes says.

"Old world" cities such as New York and London have experienced strong growth at the top end of the market, but the "new economies" have done better.

While Singapore's luxury home prices have grown 144 per cent since 2005 and Mumbai's have climbed 138 per cent, Tokyo's high end experienced a relatively scant 11 per cent increase. Prices in New York did better, jumping by 26 per cent.

But established cities, especially Paris and London, have benefited from the new crop of billionaires.

Property is still a key investment for the richest class, typically comprising 35 per cent of their portfolios, according to a survey this year by Knight Frank. Other factors, such as the quest for high-quality education, influence decisions.

More and more billionaires are sending their children to international schools, the analyst Rupert Hoogewerf notes.

"The Chinese entrepreneurial classes are increasingly looking to secure an overseas education for their children," he wrote in a recent report. "The purchase of a house nearby for holidays and the requisite bimonthly mother's visit is a natural step."

It is still difficult to determine where wealthy buyers will decide to buy. But Ms Barnes believes the trend towards exclusive neighourhoods will continue.

"You will see more wealth creation during the next five years and that will find its way into residential real estate," she says.

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Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
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COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 

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Director: Guy Ritchie

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Three out of five stars

Dubai works towards better air quality by 2021

Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.

The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.

These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.

“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.

“We’re in a good position except for the cases that are out of our hands, such as sandstorms.

“Sandstorms are our main concern because the UAE is just a receiver.

“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”

Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.

There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.

“There are 25 stations in total,” Mr Al Daraji said.

“We added new technology and equipment used for the first time for the detection of heavy metals.

“A hundred parameters can be detected but we want to expand it to make sure that the data captured can allow a baseline study in some areas to ensure they are well positioned.”

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Date started: August 2021

Founder: Nour Sabri

Based: Dubai, UAE

Sector: E-commerce / Marketplace

Size: Two employees

Funding stage: Seed investment

Initial investment: $200,000

Investors: Amr Manaa (director, PwC Middle East) 

COMPANY%20PROFILE
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