The Property Hotspots to Invest In This Year
From Madrid to Moscow, Kampala to Kuala Lumpur, a list of the top investment micro-locations from a global property expert.
International property agent Knight Frank highlights the top seven real estate investment hotspots with the help of its local experts, as published in its 2020 Wealth Report.
RUE SAINT-HONORÉ, PARIS, FRANCE
The rue Saint-Honoré runs almost 2km between the CBD and Les Halles, a major regional transport hub and popular shopping district. The stretch between rue Royale and the rue Saint-Roch church has become the destination for luxury retail.
Why is it up and coming?
The transformation began in 2011 with the opening of the Mandarin Oriental hotel. In just a few years, the street has become a target for major retailers, accounting for almost a quarter of all luxury store openings in Paris. The flagships of several of the world’s most prestigious brands are concentrated within less than 800m, including Chanel, Saint Laurent and Louis Vuitton. The boom shows no sign of slowing down: Burberry and Dior are both planning openings in 2020, along with high-end hotels including an extension to the fashionistas’ favourite Hôtel Costes.
What are prime yields in the area?
Between 3.5% and 2.5%, or even less for the best assets with reversionary potential. Rue Saint-Honoré has the lowest rates on the market, comparable to the levels seen in other leading Parisian luxury and tourist districts such as Avenue Montaigne or the Champs-Élysées.
By David Bourla, Chief Economist and Head of Research, Knight Frank France
MADRID NUEVO NORTE, MADRID, SPAIN
A new financial district inspired by the City in London, Madrid Nuevo Norte will cover an area more than 5.6km long by 1km wide. At its heart will be a new underground transport hub, surrounded by green space, residential areas and retail units.
Why is it up and coming?
Europe’s largest urban redevelopment project, Madrid Nuevo Norte will generate thousands of jobs, create new public spaces and provide key infrastructure including 1 million sq m of office space. It will utilise the large empty space that splits North Ma- drid, currently occupied by the railway sidings leading out of Chamartín Station. It is also very close to the airport.
What are prime yields in the area?
It seems reasonable to expect yields in the same region as the prime AZCA and Castellana axis; that is, between 3.5% and 4.5%.
By Rosa Uriol, Deputy Head of Valuations and Head of Research, Knight Frank Spain
NORTH SYDNEY, AUSTRALIA
On the north side of the world-renowned Sydney Harbour Bridge, this area has historically functioned as an extension of the CBD office market. Now though, it is emerging as an important market in its own right.
Why is it up and coming?
North Sydney is primed for expansion and revitalisation, and in coming years will benefit from demand spilling over from the city’s crowded CBD. Game-changing improvements in connectivity via the Sydney Metro – the country’s biggest public transport project – along with improved amenity and new supply, has increased its appeal to occupiers, especially those in the technology, media and telecomms sector, which has accounted for 33% of leasing activity over the past two years.
Khamovniki is close to Moscow’s main business areas, but retains a more tranquil feel. Considered one of the most prestigious locations in Moscow, it is distinguished by its excellent transport links and well-developed infrastructure.
Why is it up and coming?
The district leads in terms of the sheer number of deals – one in every five units in the high-end residential real estate market is purchased here. The vast majority of buyers are acquiring apartments for their own permanent residence and a high proportion are families with children, for whom all the necessary social infrastructure is pro- vided. Every year several new projects appear, but due to constant high demand, supply volume has not changed much over the past years.
What are prime yields in the area?
In terms of pricing, the big story of the past year has been the 12% rise in values, which means that the average price per sq m now stands at Rb825,000.
By Andrey Solovyev, Head Of City Sales, Knight Frank Russia
TUN RAZAK EXCHANGE, KUALA LUMPUR, MALAYSIA
The 70-acre integrated urban development of Tun Razak Exchange (TRX) is Malaysia’s first dedicated financial district, and home to the The Exchange 106 @ TRX, which at 492m is South-East Asia’s tallest building.
Why is it up and coming?
Set in a lush park environment, TRX enjoys excellent connectivity with a dedicated MRT interchange on the doorstep. TRX will offer a great “work/life/play” balance for local and international work- ers alike, and is also expected to spur rejuvenation in the neighbouring localities of Imbi and Pudu.
What are prime yields in the area?
Prime office yields in Kuala Lumpur are in the region of 6.5%. Well-located newer office buildings with higher specifications generally command higher rental rates and offer higher yields.
By Judy Ong, Head of Research and Consultancy, Knight Frank Malaysia
WADALA TRUCK TERMINUS, MUMBAI, INDIA
Wadala is close to the centre of the Mumbai Metropolitan Region (MMR), and has excellent connectivity, with major roads linking it to south Mumbai, Navi Mumbai and the central suburbs and a monorail connection to western and central railway networks.
Why is it up and coming?
The 288-acre truck terminus is being shifted out of Wadala and the land is being developed into a prime real estate location similar to the Bandra Kurla Complex in Mumbai’s CBD. If the Mumbai Metropolitan Regional Development Authority (MMRDA) can work the same magic at Wadala then at least 50 million sq ft of real estate supply, connect- to various parts of the MMR via three mass rapid transport systems currently under construction, can be expected in the region.
What are the prime yields in the area?
Bandra Kurla is one of India's most sought after business districts and cap rates hover around 8 percent. If MMRDA is able to do the same at Wadala, similar rates can be expected.
By Vivek Rathi, Director – Research, Knight Frank India
KOLOLO, KAMPALA, UGANDA
Long known as Kampala’s diplomatic quarter – the area is home to many embassies and ambassadorial residences – Kololo is also the city’s second largest office market, accounting for at least 20% of all office space.
Why is it up and coming?
With less congestion, better security and proximity to high income residential suburbs, Kololo is fast emerging as Kampala’s new office hub and an attractive alternative to the established CBD. It is also easily accessible from major arterial routes such as Acacia Avenue, Lugogo ByPass Road, Prince Charles Drive and Wampewo Avenue. Kololo is positioned to benefit from a revolution in corporate relocation, with an increased focus on transport links, walkability and amenity-rich office environments.
What are prime yields in the area?
On average yields are 9.5% and 10.5% for prime office space and secondary office space respectively.
By Francis Bbosa, Research Analyst, Knight Frank Ugan
