If you're looking for good value for your real estate millions, you might want avoid Monaco and head to South Africa.
The Wealth Report 2016, released Wednesday by real estate firms Knight Frank and Douglas Elliman, looked at what US$1 million can buy around the world.
According to the report, Monaco remained the world's most expensive residential real estate market on a square-meter basis, with US$1 million buying only 17 square meters, or 183 square feet. That means for US$1 million you can get a 12-by-15-foot room, likely overlooking a water-treatment plant the rather than the marina.
Hong Kong was the second most-expensive market, with US$1 million buying 20 square meters, or 215 square feet. London ranked third with 22 square meters, or 236 square feet.
New York once again ranked as the most expensive US city on a per-meter basis, with US$1 million buying 27 square meters, or roughly 290 square feet.
The least expensive cities on the list, which looked only at "prime" real estate (in other words, the top segment of each market) were Cape Town, South Africa, and Sao Paulo, Brazil. Brazil's economic crisis means that US$1 million now buys 203 square meters, or 2,185 square feet of prime real estate. That compares with 142 square meters, or around 1,500 square feet, last year. In Cape Town, US$1 million buys 255 square meters, or 2,745 square feet.
The most expensive luxury real estate markets, however, weren't the ones that saw the biggest price gains. According to the report, Vancouver saw the most substantial lift, with prices up 25 per cent. Sydney ranked second by this metric, with prices rising 15 per cent. Shanghai ranked third, with 14 per cent growth.
All three markets have at least one thing in common: Chinese buyers. Brokers and real estate experts say China's economic slowdown has actually increased overseas property buying by wealthy Chinese, and they expect that wealth flight to continue or even accelerate in 2016.
"Demand from Chinese buyers is stronger right now than it was last year," said Howard Lorber, chairman of New York-based Douglas Elliman.
In the US, San Francisco experienced the biggest growth, with prices up 11 per cent in 2015. Miami ranked second among US cities, with 6 per cent price growth, followed by Los Angeles at 5 per cent. New York prices were up a little more than 2 per cent.
The markets that saw that biggest price gains in 2015, however, aren't likely to repeat in 2016. According to London-based Knight Frank, Sydney will top the list in 2016, with prices expected to rise 10 per cent. New York and Monaco are expected to tie for second, with anticipated price growth of 5 per cent. Shanghai prices are projected to rise 4 per cent.
The Wealth Report said sales and prices are expected to slow worldwide in 2016, as wealth creation slows on the back of weaker growth in China and other emerging markets, as well as volatile financial markets. What's more, prices in the top cities have gone up so far so fast, they may be reaching a ceiling.
"If you look at places like New York, London or Hong Kong and other sort of key markets, they are starting from a very high level of pricing at the current time," said Liam Bailey, global head of research for Knight Frank. "So I think we should expect slower price growth at best over the next few years compared to the past five years."