Year 2015: Lowest property tax cost in Monaco, Dubai; London prime city for wealthy

Dubai and Monaco were among the top 15 global cities with lowest property tax costs, as London remained the most important city to the world's wealthy, according to Knight Frank.

In its prediction for 2016, the UK-based consultancy expected Sydney to outperform the world’s top global cities in 2016.

“As we enter a new era of rising interest rates, greater regulation and potentially lower returns, it will be interesting to see which cities’ prime residential markets will outperform. Events in the world’s two largest economies look set to dominate the proceedings in 2016.

“The scale of the slowdown in China and the recent US interest rate rise will determine the performance of property markets across developed and emerging markets alike over the next 12 – 18 months,” said Kate Everett-Allen, Partner, International Residential Research, Knight Frank.

“If we are to pick one prime market which we predict will outperform the world’s top tier of global cities, it is Sydney. Nonetheless, even here the pace of luxury price growth is expected to slow from 15 per cent year-on-year in 2015 to 10 per cent in 2016. Australia’s economic slowdown, weaker stock market performance in recent months and the introduction of foreign investment fees explain the lower rate of growth in 2016.”

Nicholas Holt, Director of Asia Pacific Research, Knight Frank, said: “The rise in US interest rates will most directly impact currencies with dollar or basket-based pegs which will see interest rates dragged upwards in parallel with the greenback – most notably the Hong Kong and Singapore dollars.

“In both of these markets, residential product has benefited from cheap credit over the last few years. Holding everything else equal, an increase in interest rates will have a dampening effect on these two global cities as the cost of debt increases. We could see sales volumes compromised as new purchasers see mortgage rates rise, and the attraction of property as an investment recede slightly.

“However, cooling measures that we have seen put in place in both Hong Kong and Singapore could counter balance these impacts. The measures provide policy makers with the opportunity to try and re-inflate demand if market corrections prove too much. A reversal or softening of some of these temporary policies could therefore be a very real possibility.”

Knight Frank’s global property statistics for 2015

# 1 London is the most important city to the world's wealthy, followed by New York and Hong Kong.

# 2 Residential prices are highest in Monaco. Here, $1 million buys you 17.3 square metres,

# 3 Singapore’s ultra-high net worth population (UHNW) is forecast to rise by 1,752 between 2014 and 2024.

# 4 A study of 15 key global cities shows that at 2.9 per cent and 2.3 per cent foreign investors are charged the lowest property costs in Shanghai for a $1 million and $10 million investment respectively over a five year period.

# 5 The same study of 15 global cities shows that tax costs are lowest in Monaco. Here, tax costs for foreign investors equate to 3.5 per cent of the property price at year five whether purchasing a $1 million or $10 million property. Dubai, with rental yields of as high as 8 per cent a year, has a tax cost of 3.6 per cent of the property price over a five-year period,

# 6 New York and London continue to lead development trends, in terms of design, pricing and iconic architecture.

# 7 Val d’Isere and Meribel lead the 2015 Ski Property Index recording annual price growth of 5.8 per cent and 4.5 per cent respectively

# 8 Online viewings of island properties for sale increased by 21 per cent compared with a year earlier

# 9 Property accounted for 32 per cent of an UHNWI’s investment portfolio according to this year’s Attitudes Survey.

# 10 Cape Town, Zurich and Toronto recorded the strongest rise in prime rents in the year to June 2015

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