Prime position, upper crust properties are resisting the global downturn in values while prices at the top end in South Africa are still far below the international norm.

This is the conclusion drawn by Lanice Steward, MD of Anne Porter Knight Frank, from the latest edition of The Wealth Report published annually by Knight Frank, a UK based property marketer and administrator.

“In central London prices rose by 29 percent in the year ending December 2007, but prices of properties valued above £10-million rose by more than 37 percent in the same period,” says Steward quoting the report’s summary.

The report also mentions that prices in the US fell by 4.5 percent over the past year and by 4.2 percent in New York. Although prices are still declining, prime Manhattan properties rose by 25 percent in the year to December while properties priced at more than €10-million are rising by almost 30 percent.

Nick Candy, a prominent London developer whose company recently paid £959-million for a central city residential site, is quoted in the report saying that “…if you buy quality, you will have still made the best long-term investment possible”.

Prime SA property is dirt cheap

Just how inexpensive prime South African property is in comparison with the leading property performers worldwide is revealed by a table of per square metre prices in 35 top areas. London, Monaco, St Jean Cap Ferrat and Courchevel (in France), Manhattan (New York) and Cortina (Italy) lead the list with prices ranging from €22 500 to €46 000 per square metre. By comparison, top Clifton and V & A Waterfront prices (which have recently hit all-time highs) are still only €6 000 to €8 000 per square metre — prices that most South Africans would regard as way over the top.

The Wealth Report ascribes these very high international prices to a significant worldwide rise last year in the number of High Net Worth Individuals (HNWIs). The biggest increases came from China (14 percent) and India (9 percent). In the UK and Japan the number of HNWIs now exceeds 20 000. The USA is, however, still way ahead of the pack with 460 Dollar billionaires.

HNWIs, says Steward, tend to have an appetite for second, third and fourth properties, funding these to a greater extent than other buyers from existing assets. Usually about 40 to 55 percent of their investments in property are debt-free.

Forty-four per cent of most category HNWIs have three or more residences, 28 percent have two, but among the dollar billionaires — the super rich — 60 percent own three or more residences, often not regarding any as their main home.

Steward notes that HNWIs place physical and property security first on their list with political and economic security a close second when looking for additional homes.

In the light of huge differences in the price of prime South African and prime international properties Steward’s firm will now assist Knight Frank to increase publicity of the opportunities that exist here.