Christie's Creates New Luxury Property Index

Tom Burroughes

5 March 2013

A lack of supply and strong international demand for luxury properties are driving such real estate prices to historic highs, with London’s record $121 million sale and New York’s $88 million sale keeping both cities at the top of a new index from Christie’s that measures the luxury property sector.

Christie’s International Real Estate, part of the auctioneer firm, has published Luxury Defined: An Insight into the Luxury Residential Property Market, comparing and contrasting 10 of the world’s most sought-after markets: London, New York, Hong Kong, Paris, San Francisco, Cote d’Azur, Toronto, Dallas, Los Angeles, and Miami.

Meanwhile, the Christie’s International Real Estate Index, which the firm said is the first ever “true global indicator for luxury residential real estate”, ranks markets across metrics such as record sales price, prices per square foot, percentage of non-local and international purchasers, and the number of luxury listings relative to population. The index rates cities out of a scale of zero to 100. London ranked top, at 78, followed by New York at 68, Cote d’Azur at 61, and Hong Kong at 59, Paris at 58, Los Angeles at 54; San Francisco at 53; Miami at 52, Toronto at 51 and Dallas 32.

The report adds to other surveys of luxury real estate provided by the likes of Knight Frank and Savills, for example.

The Christie’s index, the firm said, was developed to give a ranking to the cities where the auctioneer firm has an affiliate that is a market leader. It uses the residential data provided by these firms, aggregates these statistics to give its score out of a possible 100. The firm pointed out that the index is not meant to be predictive.

Among the findings, the Christie’s report noted that prestige residential real estate values will more likely follow growth trends of non-consumable luxury goods such as fine art more than the growth trends of the general housing market. Also, cash transactions dominate luxury property deals across many studied cities, but recent tax hikes on some of these markets will dampen activity this year.

“With financial markets providing a limited return on investment, high net worth individuals are recognising the intrinsic value of investing in non-consumable assets such as prestige real estate and fine art,” Bonnie Stone Sellers, chief executive of Christie’s International Real Estate, said in a statement.

Among other aspects of the Christie’s report was that Hong Kong had the second-highest average price per square foot for luxury properties of $2,958. Cote d’Azur, on the southern part of France, has the highest percentage of international and non-local buyers (90 per cent) and the highest percentage of secondary and additional home buyers (95 per cent). Almost all of the luxury deals in Los Angeles were done in cash. Toronto reported the lowest average number of days in the market for luxury properties, at 46 days.

London’s $121 million (£75 million) sale and New York’s $88 million sale pushed both cities to the top of this year’s index with the highest record home sale prices. While the report focuses on 10 indexed markets, it also provides insight into other luxury residential areas around the globe with a population of less than 150,000, such as St Bart's, French West Indies; Salzburg, Austria; Aspen, Colorado; and Jupiter Island, Florida.

Christie’s has 125 affiliated brokerages around the world.