Despite the uncertainty linked to Brexit and a sluggish real estate market, London remains the world’s most sought-after global city for ultra-high-net-worth buyers. The British capital has topped the 2017 Alpha Cities Index, a league table of the world’s most desirable urban locations produced by Warburg Realty and Barnes International Realty, in association with wealth intelligence company Wealth-X. Lisbon, which currently lies in 30th place, is tipped to see a strong increase in popularity in the near future.
The Index ranks cities by examining a mix of factors that range from practical matters (transport links, personal safety, eco-friendliness, access to a leading university) and financial concerns (ease of doing business, fiscal competitiveness, financial stability and property price per square foot) to more impalpable considerations such as the richness of the local culture heritage, the availability of luxury shopping and the number of ultra-high-net-worth residents.
London tops the charts
A vibrant culture scene, four extremely well-connected airports, a reputation as a financial safe haven and access to several leading university helped propel London to the top spot in 2017.
“The highly affluent reside in and visit London to socialize, do business, vacation, and take advantage of the myriad services and cultural highlights on offer,” write analysts in the 2017 Alpha Cities report. “A luxury residence here is widely regarded as a lifestyle necessity for the wealthy elite.”
In the past few years, however, changes in Britain’s Stamp Duty Land Tax rates have resulted in a massive rise in the levy payable on high-value properties, deterring many top-end buyers and eventually slowing down the British capital’s luxury real estate market in 2016. As a result, both sale values and volumes saw a drop last year, according to data by residential investment company London Central Portfolio.
Britain’s decision to leave the European Union last June added another degree of uncertainty but the ensuing decline in the value of the pound has made London properties potentially more attractive to dollar-denominated buyers. Overall, believe the Alpha Cities analysts, the British capital remains very appealing to UHNWIs.
“London is home to many of the world’s most affluent families and it continues to attract British and international buyers,” Alex Newell, managing director of Hanover Private Office, writes in the 2017 Alpha Cities report. “Post the Brexit vote, a weaker pound sterling, low interest rates for the medium term, and the choice of quality luxury real estate means 2017 will be a once in-a- generation buying opportunity. London will remain a global city, which is hard to beat for business, family, and lifestyle.”
Lisbon’s the one to watch
Right behind the British capital, in second place, is New York, which tops the charts for its excellent financial stability and the size of the local UHNWI population, but can’t compare to London on personal safety and ecological footprint. Third is Tokyo, followed by Sydney and Paris, which is highly valued for its culture, lifestyle and transport links but fares worse than most places on real estate prices and taxation.
No other European city makes it within the index’s top ten spots, which heavily feature North American hubs instead. However, Europe is the most represented continent across the rankings, accounting for 17 locations (and up to 22 when considering the wider EMEA region).
Perhaps surprisingly, the main driving force behind this regional result is not culture, but business and finance. Real estate in many European cities offers good value for money and is taxed very competitively, especially in Northern capitals such as Stockholm and Copenhagen, which also perform very well for ease of doing business, and in Lisbon, where UHNWIs can take advantage of attractive residency schemes.
The Portuguese capital, in particular, looks set to become even more popular among global buyers. Both the 2017 Alpha Cities report and an earlier study by Christie’s International Real Estate pick it as a ‘city to watch’ for its combination of affordable real estate and foreign investment programmes — the Golden Visa, which draw the non-European market, and the Non-Habitual Resident Program, which is geared towards Europeans who want move to Portugal — along with a welcoming atmosphere, thriving, tech-driven economy, excellent climate and vibrant culture. Among others, Lisbon was named city of the year in Wallpaper* magazine’s 2017 Design Awards.
“Lisbon is beautiful,” says Rafael Ascenso of Porta da Frente, a Christie’s International Real Estate affiliate. “Its history, climate and food, its public transport network and its capacity for high-quality accommodation make it special. Here, people find excellent quality of life at a much lower cost than in other main cities in Europe and across the world.”