Luxury property prices : the luxury sector is affected by the financial crisis

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CategoryReal estate news

ChapterLuxury real estate

Luxury property
Luxury property: crisis

The luxury property sector is affected by the financial crisis Up until recently this sector had escaped the effects of the financial crisis with an 11% increase in 2007. However, prices are starting to level out and even drop in some cases.
The luxury or premium sector refers to properties costing over one million Euros. In this sector, the hardest hit are properties priced at 1 to 3 million Euros (drop of 24% in transactions between January and September 2008 against the same period in 2007).

Luxury property: buyers are negotiating

A new factor in the luxury real estate sector is that buyers are negotiating sales prices. Luxury property professionals have all observed this new approach. Buyers no longer hesitate in asking for reductions of 5% to 10%. For properties with even a slight reason for being considered ‘second category’ (ground floor, first or second floor) reductions can reach 15% or 20%.

Luxury property: who is buying today?

The luxury property sector is prized by rich foreign buyers. Russians are still very active, followed by American, British, Belgian, Swiss and Italian buyers.

London, Brussels, Miami and Marrakech, victims of the financial crisis

Luxury property in London, Brussels, Miami and Marrakech is also victim to the financial crisis London was the first to be affected. According to the Knight Frank index, prices fell back by 13% between March and October 2008 and experts expect a further drop of 15% to 20% in the British capital. The fall back is even more spectacular in Brussels where prices had very much overheated and were far too high. Premium properties in Miami have returned to their 2003 levels but Marrakech is still subject to a certain level of speculation.

Updated on: 03/12/2008

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