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Domestic Demand ''Key'' for World Cities Performance

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real estate  United States  Russia  real estate markets  London  New York  Savills  Moscow  Yolande Barnes  Domestic Housing Markets  World Cities House Price Index 

Domestic Demand ''Key'' for World Cities Performance

By - Wednesday 12 September 2012

Real estate markets in the world's leading cities have been supported by domestic demand, with this proving to be a crucial factor in their continued strong performance. Research published by Savills revealed the location with the most robust property sector was Hong Kong, which has been buoyed be demand from local, rather than international, buyers. In the first six months of the year, the city recorded price growth of 7.4 per cent, putting it at the top of the firm's World Cities House Price Index.

As well as experiencing the most substantial increase in values, Hong Kong is also the most expensive city on the planet when it comes to property ownership, with such assets here costing 82 per cent more than they do in London, which is the next most expensive location in which to buy a home, Savills revealed. While capital value growth has continued in many of the prime cities surveyed by the firm, it has slowed in 2012, which has allowed rents to make up some ground.

Yolande Barnes, director of Savills global research, commented: "Even if investor and owner-occupier appetite falters for a period, incomers will still need accommodation and will continue to become tenants. The fundamentals of demand for accommodation remain strong and the outlook for the rental market is positive across the index." From a property investment point of view, New York offers the highest yields at 6.9 per cent, with rents in the US city increasing by 12.7 per cent since June 2005. Moscow is in second place, with a yield of 5.6 per cent; however, the Russian destination has seen rents rise by a staggering 56 per cent since the middle of 2005.

Russia and Hong Kong were also among the best performing locations in the recent Knight Frank Global House Price Index, being listed in fourth and seventh place respectively. According to the real estate firm, Russia saw housing values increase by 9.9 per cent nationally in the second quarter of this year, compared to the same period 12 months earlier, while Hong Kong's property prices were up by 7.3 per cent in this timeframe.

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