Technology hubs may be the place to make money if one is considering top-end real estate, according to a new report.
High-end residences in Shenzhen, one of China’s technology centers, led price gains with a 93 percent rise in the five years ended in December. The average cost of such property types there is now $15,900 a square meter, higher than Los Angeles or Moscow.
«The fortunes of different prime real estate markets have closely followed the changing patterns of wealth generation and, in particular, the rise of tech as a source of wealth,» said Lucian Cook, head of residential research at Savills in a report. Berlin, home to a thriving startup scene, rose 53 percent in the period, making it the best performing European city ranked by Savills. San Francisco was the best U.S. performer with a 28 percent increase.
Held Back
Prime properties -- broadly defined as the top 5 percent of residences in a market -- in areas like Shenzhen, Berlin and San Francisco have outperformed cities such as Singapore, Paris and New York over the past five years, according to data compiled by real estate services firm Savills.
«Some of the more mature prime markets, where banking and finance have historically played more of a role in wealth generation, have been held back by a combination of regulation, taxation, and political uncertainty,» added Cook.
China's Economic Growth
Even as recent gains piled up in tech centers and mainland China, real estate in traditional strongholds remain the most expensive. Prime property in London costs on average $20,700 a square foot, New York is $27,000 and Hong Kong $49,600.
China’s economic growth helped with pushing six Chinese cities among the 22 tracked by Savills. However, the spread of coronavirus may have shrunk some of these gains since December, as Asian property markets ground to a halt with home sales in China falling 90 percent in the first week of February.
«Some of these more established markets are now looking comparatively good value, which is likely to narrow the divide in price growth. However, areas able to tap into demand from newly created wealth are still expected to perform the most strongly,» said Cook
