By Ferdinand Mwongela
According to Knight Frank’s Prime Global Cities Index for the first quarter of 2012, the value of prime property in the world’s key cities falling by 0.4 per cent but Nairobi performed quite well. “ Nairobi (up 24 per cent) was the strongest performer in the last 12 months,” read the report.
The survey says this was the index’s first quarterly fall since the depths of the global recession.
According to the report, the first three months of 2012 brought with it little new momentum, but all was not lost. “Despite the overall index’s sluggish performance, four prime markets achieved double-digit growth over a 12-month period; Nairobi, Jakarta, Miami and London,” said the survey.
London and Singapore were singled out as proof of resilience in the prime markets with both cities shrugging off the introduction of new stamp duties in the first quarter of 2012.
Nicholas Holt, Knight Frank’s Asia-Pacific Research Director said: “Prices not only held up but actually increased slightly at the very top end of the Singapore market in Q1 2012.
This was not only due to fairly resilient domestic demand, but also due to wealthy Chinese, Indonesian and Indian buyers who continued to buy in this segment of the market undeterred by the surtax.” According to Holt, a new stamp duty, ten per cent for foreign buyers introduced in December 2011 in Singapore, dented demand but not prices.
The survey sums up the situation thus: “In our view, the overall index will remain subdued in 2012 fluctuating between marginal price falls and rises (with London, Moscow, Jakarta, Nairobi and Singapore expected to be the strongest performers) but it seems unlikely we are on the cusp of a new deflationary cycle in luxury global house prices.”
At the same time, however, it says that capital flight will continue to focus on cities with low political risk, transparent legal systems, and good security among others.
With the oncoming of elections, it remains to be seen which direction the Nairobi market will take. The report singled out critical elections in Russia, France and Greece as some of the reasons some “luxury buyers took to the side-lines to observe their market’s trajectory.”