This document provides an overview and summary of The Wealth Report 2010, which examines prime residential property and wealth from a global perspective. It discusses trends in the prime residential property markets of major cities and regions worldwide based on Knight Frank's Prime International Residential Index. It also explores current attitudes of high-net-worth individuals toward property and wealth, wealth patterns around the world, emerging wealth hotspots, and the outlook for various property markets and economies. The report aims to give readers valuable insight into the world's most valuable residential property markets from luxury to prestige properties.

1. A G LO B A L P E R S P E C T I V E O N P R I M E R E S I D E N T I A L P R O P E R T Y A N D W E A LT H
THE DEfINITIVE PRIME RESIDENTIAL BRIEfING NEW HIGH fOR CONTEMPORARY ART
THE WORLD’S MOST INfLuENTIAL CITIES ASIA PACIfIC PRIME REAL ESTATE OuTLOOk
fOCuS ON PROPERTY MARkET INVESTMENT WHERE THE WEALTHY ARE INVESTING

2. KNIGHT FRANK TERMS AND DEFINITIONS
HNWI is an acronym for 'high-net-worth individual’, a person whose
investible assets, excluding their principal residence, total between
$1m and $10m. An UHNWI (ultra-high-net-worth individual) is a
person whose investible assets, excluding their primary residence,
are valued at between $10m and $100m-plus.
The term ‘prime property’ equates to the most desirable, and normally
most expensive, property in a defined location. Commonly, but not
exclusively, prime property markets are areas where demand has a
significant international bias.
Exchange rates: unless otherwise stated these were calculated using
the rate on Feb 1 2010. The Wealth Report 2010 Attitudes Survey:
the participants of the survey comprised clients of Citi Private Bank.
Survey conducted between 1 December 2009 and 31 January 2010. CONTRIBUTORS Prime, prestige, luxury – all labels applied to the top end of the residential property
Written and edited by Andrew Shirley and Liam Bailey, Knight Frank LLP .
For research and press enquiries: Liam Bailey, Knight Frank LLP , market in different parts of the world.
55 Baker Street, London W1U 8AN +44 (0)20 7861 5133 ANDREW SHIRLEY
A
ndrew, when not editing While the names may differ, the desire of High¯Net¯Worth Individuals to own
The Wealth Report 2010, is head of and invest in the best property is ubiquitous around the globe. As we discover in
rural property research at Knight Frank.
THE WEALTH REPORT 2010
For this issue he interviewed Trudie
our focus on prime property in Asia Pacific (page 18), even the world’s smallest
Content and editing: Knight Frank Styler about the Italian estate where emerging economies, such as Cambodia, are promoting themselves as development
Wealth Report Editor – Andrew Shirley
Editor at large and head of research content – Liam Bailey she and husband Sting are creating hotspots and attracting growing amounts of internal and external investment.
their own wine.
Marketing and PR The tangible and straightforward nature of residential property, especially when
For Knight Frank – Rebecca Maher PAGE 44
For Citi Private Bank – Pauline Loohuis the outlook for other asset classes is uncertain, explains this attraction. The results
Design and art direction: Smith & Milton LIAM BAILEY of The Wealth Report’s 2010 Attitudes Survey (page 40) clearly indicate that
Strategic Director – David Haseler L
iam is The Wealth Report’s “editor
Creative Director – Steven Anderson
at large” and also heads up Knight HNWIs, wherever they are around the world, still see property as one of the best
Senior Designer – Andy Isaac
Account Manager – Mark Mobbs Frank’s residential research team. assets to own, with most predicting values to grow in 2010.
Production Manager – Kevin O'Brien He likes to take a global view and
in this issue reviews the market for
Furthermore, property is viewed as a strategic investment that can ride out
Printing:
Murray Arbiter at Quadracolour Limited prime residential property around economic cycles. Most of the survey’s respondents said they were interested in
Front and back cover image: the world. long¯term capital growth from their property portfolios, rather than income.
Photographed by Duncan Kendal
PAGE 6
With special thanks to Bentleys of London Despite this globalisation of property as the “must¯have” asset class, it would
Photography: SEBASTIAN DOVEY still be wrong to talk about the marketplace for the world’s most desirable properties
James Day, Joachim Ladefoged, Sanna Kannisto, Ross Honeysett
S
ebastian is head of Scorpio as a single entity. Just as the labels vary, so do the characteristics of individual
Partnership, which specialises in
advising the wealth management markets, not only between continents and countries, but also from city to city
industry. For The Wealth Report and region to region.
2010 he looks at wealth patterns
around the world.
Each market – as highlighted by the latest results from our Prime International
PAGE 28 Residential Index (page 6) – sits in a different part of the economic cycle. Some
are booming to the point where overheating is once again a concern, while others
IAN BREMMER
A
leading authority on political risk
are still struggling to shake off the impact of the global recession.
and head of Eurasia Group, Ian offers Market drivers are also becoming more nuanced in the light of varying
Wealth Report readers his perspective government responses to the credit crunch. Cities like Washington DC and Beijing,
on the factors shaping the world’s
political landscape in 2010. as The Wealth Report 2010 Global Cities Survey (page 34) discusses, now find
PAGE 30 themselves transformed into banking as well as policy hubs, attracting a new breed
of property owner.
JONATHAN FENBY
C
hina expert and co-founder of The last decade witnessed huge shifts in the global property market with many
respected emerging economies new opportunities emerging. The next 10 years are likely to see even more changes.
analyst Trusted Sources,
Jonathan looks at Beijing’s
Luxury, prime or prestige – however you like to describe them – The Wealth
changing global role as the Report 2010 offers a unique and invaluable insight into the world’s most valuable
nation’s economic power property markets.
© Knight Frank LLP 2010
continues to grow.
This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections PAGE 38
presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document.
As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without
prior written approval of Knight Frank to the form and content within which it appears. ADRIAN WOOLDRIDGE
Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of
members’ names.
A
s The Economist’s former
Washington bureau chief, Adrian
The Wealth Report is provided as a service to clients of Citi Private Bank. The views expressed herein are those of Knight Frank LLP and associates, and do not necessarily reflect the views of Citi Private Bank, has experienced the unique nature
Citigroup Inc., Citigroup Global Markets Inc., and its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the
of the US’s capital city. He shares
purchase or sale of any security. Past performance is no guarantee of future results.
Citi Private Bank” is a business of Citigroup Inc., which provides its clients access to a broad array of products and services available through bank and non-bank affiliates. Not all products and services are his insight in the latest edition of Andrew Shirley
provided by all affiliates or are available at all locations. In the U.S., brokerage products and services are provided by Citigroup Global Markets Inc. (“CGMI”), member SIPC. GGMI and Citibank, N.A are
affiliated companies under the common control of Citigroup. Outside the U.S., brokerage products and services are provided by other Citigroup affiliates. In the United Kingdom, Citibank N.A., London branch our Global Cities Survey. Editor of
and Citibank International plc, Canada Square, Canary Wharf, London E14 5LB, are authorized and regulated by the Financial Services Authority. The contact number for Citibank N.A. London branch and
Citibank International plc in the United Kingdom is +44 (0)20 7508 8000. In Jersey, this document is communicated by Citibank N.A., Jersey Branch which has its registered address at PO Box 104, 38
PAGE 39 The Wealth Report 2010
Esplanade, St Helier, Jersey JE4 8QB. Citibank N.A., Jersey Branch is regulated by the Jersey Financial Services Commission to conduct deposit taking business under the Banking Business (Jersey) Law
1991 and investment business under the Financial Services (Jersey) Law 1998. Citibank N.A., Jersey Branch is a member of the Depositors Compensation Scheme as set out in the Banking (Depositors
Compensation) (Jersey) Regulations 2009. Further details of the scheme are available on request.
3 |
Citi, and Citi with the arc design are registered service marks of Citigroup or its affiliates.
©2010 Citigroup. All rights reserved.

3. }
CONTENTS
THE WEALTH REPORT
CANADA
216,000
UNITED KINGOM GERMANY JAPAN
MONITOR
-19% 439,000 342,000 669,000
NETHERLANDS
-9% -21% -12%
100,000 RUSSIA
FRANCE -22% 101,000
ITALY
BELGIUM
-23%
266,000
28
46,000 232,000
UNITED STATES
-14% -23%
-18%
CHINA
ISRAEL
SPAIN 7,000
}
-12% 343,000
SWITZERLAND
2,519,000 97,000
-18% -11%
165,000 INDIA HONG KONG
-19%
SPREAD THE
-13% 85,000 72,000
PORTUGAL
-24% -23%
MEXICO COLOMBIA
13,000
UAE
SINGAPORE
-24%
WEALTH
130,000 20,000
THE WEALTH REPORT
21,000
-4% -2% BRAZIL -2% 58,000
INDONESIA
-22%
CHILE
19,000
AUSTRALIA
181,000
SOUTH AFRICA
-16%
30,000 -9%
PROPERTY Where the world's wealthy live
-2% 96,000 146,000
-11%
-20%
ARGENTINA
49,000 now and where future wealth
will be based
-13%
6 30
GLOBAL VIEW GLOBAL WEALTH
Knight Frank's latest research
on the performance of prime
RISKS
Exclusive analysis for
residential property markets
The Wealth Report 2010 from
Eurasia Group's Ian Bremmer
12
METAMORPHOSIS 34
Investors return to the property THE NEW
investment arena
POWER BROKERS
Knight Frank's authoritative guide
17 to the world's most influential cities
ISLAMIC
FINANCING
Why Sharia compliant
investments are on the up
18 THE WEALTH REPORT
}
ATTITUDES
ASIA PACIFIC
IN BLOOM
The region's key property markets
and economies in focus
40
SMART MONEY
The Wealth Report's unique
survey of HNWI attitudes to
THE WEALTH REPORT
property and wealth
TRENDS
44
}
TRUDIE STYLER
26 Exclusive interview with Trudie
ART FOLLOWS Styler about the Italian estate
she shares with husband Sting
COMMERCE
The contemporary art market
bounces back to a record high
KNIGHTFRANK.COM
CITIPRIVATEBANK.COM 5 |

4. THE WEALTH REPORT
PROPERTY Knight FranK
Prime international
residential index
GLOBAL
Three years into the global housing market downturn, and at the tail end
of the world’s worst recession for 70 years, we might have expected to see
the beginning of a slow and measured property recovery. Instead, on the
VIEW
one hand, we have strong growth in London and huge uplifts in key Asian
markets.On the other, prices were still falling last year in three-quarters
of the locations featured in our Prime International Residential Index.
Liam Bailey explores this ongoing paradox
How we track tHe world’s markets… China – almost inevitably – dominates the top of demand is quick to re-establish itself with Algarve -30% and Dublin -25%), the Caribbean
our table. In Shanghai prices rose by over 50% last buyers and investors looking to capitalise on (Barbados -20%), the Americas (New York -12.5%
the knight Frank Prime International residential Index (PIrI) year with Beijing close behind. Local commentators the better value offered. At the same time supply and San Francisco -16%) and even some locations
is the most comprehensive analysis of global luxury residential markets. are convinced that price growth at this rate is not becomes constrained as development schemes in Asia Pacific (Kuala Lumpur -1.8%), the downturn
Our index is compiled using data supplied by our global network. necessarily a bubble in the making – pointing to are put on hold during the initial stages of the went truly global in 2009.
some pretty compelling market fundamentals, market downturn. In most locations, however, looking at annual
All annual price growth figures relate to the 12 months to the end
which we discuss below. Away from these growth markets, the price growth figures does not tell the complete story. The
of December 2009. Over the past 12 months we have seen a great falls that began in 2007 were, by 2009, afflicting vast majority of price falls took place in the first half,
Prime property is the most desirable, and normally most expensive, reversal of fortune – the worst performers in 2008, a wider range of global markets. In last year’s if not the first quarter of the year. In New York, for
property in a defined location. Commonly, but not exclusively, prime led by Hong Kong (which has moved from 55 to 3 report we revealed that 41% of the prime markets example, prices fell more than 12% in 2009, but
in our ranking), Singapore (51 to 5), and London we tracked had seen annual price falls; this year actually rose by 2% in the final six months of the
property markets will be areas where demand has a significant
(53 to 9), were last year’s best. the figure is 73%. year. Markets recovered on the back of improved
international bias. These markets have all confirmed the attraction With prices falling in the Middle East (Dubai confidence and the return of global economic growth.
of prime residential property. When prices fall, -45% and Abu Dhabi -10%), Europe (Western
KNIGHTFRANK.COM
CITIPRIVATEBANK.COM 7 }

5. THE WEALTH REPORT
PROPERTY Knight FranK
Prime international
residential index An interesting divergence in performance can be PRIME PROPERTY PRICES IN
seen when we split our results by location type. KEY GLOBAL CITIES, Q4 2009
On an unweighted basis prices fell by around 5% LOCATION FROM TO FROM TO
THE KNIGHT FRANK PRIME 1
PRICE in 2009 in the 56 prime markets we track. Coastal US$ Sq FT € Sq M
INTERNATIONAL RESIDENTIAL CHANGE and country second home locations saw prices MONACO 4,300 5,900 36,000 44,000
2
INDEx RESULTS FOR AbOVE 40% fall by 14% and 11.9%, respectively. European LONDON 3,600 4,400 26,900 32,900
THE 12 MONTHS TO 1. SHANGHAI*
2. bEIjING*
52.0%
47.0%
ski resorts were slightly more resilient – falling by
PARIS
HONG KONG
2,400
2,000
3,300
2,500
20,300
15,000
24,800
18,800
DECEMBER 2009 3 3. HONG KONG 40.5% 12%. But prime city locations were much healthier, ROME 1,800 2,500 15,000 18,500
posting an average rise of 0.4% over the year. GENEVA 1,800 2,500 15,000 18,500
bETWEEN 10% AND 20% MOSCOW 1,700 2,400 14,000 17,700
The market recovery in the cities at the top SYDNEY 1,700 2,300 14,000 17,100
4. jOHANNESbURG 17.0%
5. SINGAPORE 17.0% of our table shows renewed confidence in the TOKYO 1,600 2,200 13,800 16,900
6. jAKARTA 14.0% performance of prime property, which is welcome, MANHATTAN (NEW YORK) 1,500 2,100 12,600 15,400
7. MUMbAI 11.0% SINGAPORE 1,500 2,000 12,600 15,100
but there is a degree of concern around the speed MUMbAI 1,200 1,400 9,300 11,300
8. RIO DE jANEIRO 10.0%
and strength of the turnaround. The case for prime SHANGHAI 500 700 4,000 5,300
5 4 bETWEEN 0% AND 9% market outperformance, which we outline above, SOURCE: KNIGHT FRANK RESEARCH
9. LONDON 6.1%
6 is well made – but there are other factors at play.
10. WASHINGTON DC 5.6%
11. SAO PAULO 5.6% We have to consider the current support for
8 7
12. bANGKOK 4.6% market growth created by ultra cheap money. In fact In other, more mature, markets there are questions Future considerations
13. CAPE TOWN 4.3%
9
12 11
it is not just property markets that have succumbed regarding the sustainability of booming price growth.
14. HOME COUNTIES (UK) 1.4%
13 to exuberance – equities and commodities saw In Hong Kong, for instance, the market grew Last year we posed a question: was the downturn
10 15. ZURICH 0.0%
15 14
30 35 40 45 50 (%) prices pushed up sharply during 2009. strongly in 2009 on the back of a low interest-rate leading to a simple re-pricing of assets that had
IN GROWTH 0 5 10 15 20 25 30 35 40 45 50 (%)
Rock-bottom interest rates and the “creation” environment and an influx of capital and lending become overvalued, or something more fundamental
of money via government stimulus packages from the banks. All sectors saw an improvement. occurring in the global economy that would mean
IN DECLINE (%) -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0
(%) -50 -45 -40 -35 -30 -25 -20 -15 -10 have led to an injection of liquidity into the world
-5 0 The HK$10m+ sector, in particular, benefited prime market pricing would be further suppressed
27 19
16 17
24
18
26 PRICE economy, which has found, inevitably, its way into
16 17 26 from a 44% growth in transaction volumes to and take a long time to recover?
20 25
41 CHANGE 27 19 18 24
41
28 asset markets, including property, gold and shares.
28 23 more than 6,700. To provide an answer we pointed to the emerging
20 25
29 21 22 40 MINUS 0% TO 9% 23
42 30 34 51 29 Low interest costs have protected potentially
21 22 40 evidence in London – a city at the epicentre of the
35 31 32 33 16. TORONTO -0.5% 42 30 34 51
31 32 33
35distressed owners and reduced the supply of downturn – where we were beginning to see wealthy
43
36
37 38
39
49
50 17. SYDNEY -0.5% 36
37 38
39 50
43 property for sale. At the same time, low savings
Government intervention
44 48 18. KUALA LUMPUR -1.8% 49 buyers return to the market.
45 47 19. ITALIAN LAKES -6.1% 44 48
46 rates have encouraged the wealthy to move
45
46 47 We suggested that while no market could
52 20. MOSCOW -6.3%
52investments out of cash and into property in
In light of this strong growth, the Hong Kong
53 21. CAP FERRAT -7.5% escape a bubble-and-bust scenario, the evidence
53 government has threatened measures to restrict the
22. VALbONNE -7.5% the search for acceptable yields. This has driven was building that when the market believed that
54 23. ST TROPEZ -7.5% market – notably through mortgage lending restraint,
demand for property higher and, set against tight
54 prices had returned to offering good value, activity
24. CENTRAL ALGARVE -7.5% reducing, for example, the mortgage limit for luxury
55 25. VAL D'ISERE -8.0% supply, has served to push values upwards in
55
would rise and the perennial factors that made a
property from 70% to 60%. Despite these potential
26. ST PETERSbURG -8.9% many locations. prime market desirable would endure. Namely,
restrictions the market continues to grow.
Ironically, the unintended consequence of limited supply, the growth of demand in line with
MINUS 10% TO 14% This example points to an interesting
27. CAYMAN ISLANDS -10.0% government economic stimulus packages has the expansion of global wealth and the clustering
development. The crippling impact of property
28. GENEVA -10.0% been to support demand and pricing in top-end of the wealthy in established markets.
29. AbU DHAbI -10.0% bubbles bursting in Europe and the US has created
56 residential markets – probably not something This is exactly what happened. Supply fell in
30. MEGEVE -10.0% 56 a much more confidently interventionist approach
31. CANNES -10.0% governments would readily admit to. London and also in countless other markets where
in China, Hong Kong and Singapore (where cooling
32. PROVENCE -10.0% We ought not, however, to be too pessimistic. affluent owners or top-end property developers
33. MUSTIqUE -10.0% measures were introduced in September last year)
The fundamentals in developing markets that we decided to refrain from selling at new lower prices.
2009 RESULTS BY ASIA PACIFIC 17.1%
AFRICA 10.7%
34. THE HAMPTONS -11.0%
discuss in more detail in our Asia Pacific Focus
among other markets.
Demand then rose as buyers looked hopefully, but
WORLD REGION SOUTH AMERICA 7.8%
35.
36.
PARIS
LOS ANGELES
-12.0%
-12.1% are very impressive. The scale of demand in China,
There is a slightly troubling aspect to this.
often in vain, to secure stock at bargain prices. As
UNWEIGHTED ANNUAL % CHANGE With governments brooding in the shadows, ready
37. COURCHEVEL -12.4%
-7.7% NORTH AMERICA for example, confirms the need for new housing we have seen, those markets that appeared to be
-12.0% EUROPE
38. TOKYO** -12.5% to burst incipient bubbles as soon as they emerge,
39. MANHATTAN in the Asian powerhouse economies – 8.5m new on the verge of collapse a year ago have bounced
-13.3% CARIbbEAN (NEW YORK) -12.5% a high degree of skill is assumed from policy
-27.5% MIDDLE EAST
homes were sold in China in 2009, compared back from the ravages of the credit crunch.
40. MERIbEL -12.6% makers. The ability of markets to justify current
41. UMbRIA -14.0% with about 500,000 in the US. The issue for 2010 is how secure the renewed
pricing depends to a large degree on continued
-5.5% GLObAL Talking to Quek Kwang Meng, head of Asia bounce in pricing is in the markets at the top of
MINUS 15% TO 20% credit availability. The security of pricing in these
Pacific real estate investments for Citi Private Bank, our table. Our view is that most prime markets
42. MONACO -15.0% markets is yet to be tested. If banks were to restrict
2009 RESULTS BY CITY 0.4%
43. SAN FRANCISCO -15.7% the power of this dynamic is reinforced. Quek
liquidity or to push up the costs of finance there
are suffering from an undersupply of stock and this
LOCATION TYPE -11.9% COUNTRY SECOND HOMES 44.
45.
TUSCANY
KIEV
-16.0%
-16.0%
says that even if economic growth slows, rural
is an obvious risk of a correction.
will help maintain prices in the short term. Looking
UNWEIGHTED ANNUAL % CHANGE -12.0% SKI migration is likely to swell China’s urban areas further ahead, however, it is those locations that offer
46. CHAMONIx -17.0% This more aggressive government stance
-13.9% COASTAL SECOND HOMES
47. GASCONY -17.0% by 200m people within 15 years. a genuine lifestyle attraction to the world’s wealthy,
is not limited to Asia. From Europe to the US,
48. MALLORCA -17.0% In India the requirement for accommodation rather than just an investment opportunity, that will
-5.5% ALL 49. FLORENCE -18.0% governments have been making more active use
is growing as rapidly as in China. Despite strong prove most sustainable.
50. bORDEAUx -18.1% of the economic tools at their disposal and as a
51. DORDOGNE -19.5% price growth (Mumbai +11% in 2009) the market
by-product of bailing out banks in 2008 they have
52. bARbADOS -20.0% appears at little risk of overheating. The proportion
ACKNOWLEDGEMENTS considerable influence over lending policies. We
All data Knight Frank research except: of mortgage debt to GDP , which has hit 70% and
MINUS 21% TO 50% can expect to see more, not less, public sector
MANHATTAN, THE HAMPTONS Prudential Douglas Elliman and Miller Samuel Inc.
53. PALMA -22.0% more in countries in the developed world, still sits
TOKYO Colliers Halifax
control, at least over the short and medium term.
TORONTO Harvey Kalles Real Estate Ltd
WASHINGTON DC Evers & Co 54. DUbLIN -25.0% at around 10% in India – despite a quadrupling in
LOS ANGELES, SAN FRANCISCO First Republic Prestige Home Index
55. WESTERN ALGARVE -30.0%
the size of this mortgage market in a single decade.
56. DUbAI -45.0%
}
FOOTNOTES
9
*bEIjING & SHANGHAI Based on urban areas only
KNIGHTFRANK.COM **TOKYO Change based on land values, latest data July 2009
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