Graphic by Roy Cooper
Graphic by Roy Cooper

City superstars on course to crash as global property bubble inflates

Global property has been one of the finest investments of the last decade, with the major global “superstar cities" spearheading the charge.

New York, London, Toronto, Singapore, Hong Kong, Shanghai, Mumbai and of course Dubai are just some of the cities that have posted double-digit price rises, year after year.

Internationally mobile expats are particularly keen on global property and many have been handsomely rewarded as a result, but now they need to tread carefully.

While the breakneck growth continues in many global favourites, fears are growing that it all could end in a housing crash.

UBS Wealth Management is the latest to warn of a global city housing bubble as monetary stimulus is reversed and interest rates finally start rising. Could the city superstars come crashing back to earth, and how much exposure do you have?

Housing bubble risks are growing with the annual UBS Global Real Estate Bubble Index 2017 showing three quarters of the 20 global cities it covers are at risk of a bubble or overvalued.

The danger is greatest in Toronto, up significantly in the last year, while Stockholm, Munich, Vancouver, Sydney, London and Hong Kong remain risky, and Amsterdam has now joined this group.

Valuations are also stretched in Paris, San Francisco, Los Angeles, Zurich, Frankfurt, Munich, Tokyo and Geneva.

There are still affordable cities, with Boston, Singapore, New York and Milan looking fairly valued. However, Chicago is the only city in the study considered undervalued.

Claudio Saputelli, head of global real estate at UBS Wealth Management, says improving economic sentiment, growing incomes and cheap borrowing have driven demand for urban housing.

"As supply is always a con­straint in the most appealing cities, soaring prices are the consequence. Inexpensive financing and bullish expectations have caused valuations to skyrocket and encouraged bubble risks to grow,” he says.

The bubble has also been driven by the "superstar city" narrative, he says, as global money pours in and local prices decouple from rents, incomes and national price levels.

Mr Saputelli says the surge in international demand, especially from China, has crowded out local buyers. “Average price growth of almost 20 per cent in the last three years has confirmed the expectations of even the most optimistic investors. This thesis has helped fuel overvaluation and even bubble risks.”

Bubble or no bubble?

So are we facing the long-feared bursting of the property bubble? Paul Tostevin, associate director at property specialists Savills World Research, is sceptical.

He says local incomes are no guide to affordability in major world cities that suck in cash-rich international investors. “There is no direct relationship between local incomes, borrowing, interest rates and values.”

Analysis from Savills suggests that most prime housing values remain justified when compared to the price of alternative assets, in historic terms. “Taking gold as a benchmark, major world centres including London, New York and even Hong Kong are still well below their former peak-equivalent pricing in gold,” Mr Tostevin says.

Buyers continue to drive global house prices to fresh highs. The latest Global Residential Cities Index from Knight Frank, published in October, shows prices up 6.1 per cent in the year to June 2017, although down slightly from 6.9 per cent in the previous quarter.

Toronto remains the fastest-growing city with prices up an incredible 29.3 per cent in the year, although a new foreign buyer tax may curb future growth.


Read more:

Hong Kong property market too risky, says Savills

Toronto's property buyers and sellers fall out over price

Is the global property bubble ready to burst?

Is now the time for Gulf investors to buy London property?


Emerging markets

Emerging markets are leading the charge with prices in Kochi in India up 27.3 per cent, and three Chinese cities in the top 10, with Wuxi, Zhengzhou and Changsha all up around 20 per cent, along with Hong Kong.

Hamilton in Canada and Reykjavik in Iceland both grew around 25 per cent, while Izmir in Turkey and Wellington in New Zealand were up around 20 per cent.

Emerging market cities are now outperforming developed countries, although Russia, Latin America and Africa are all struggling.

Kate Everett-Allen, partner for international residential research at Knight Frank, says: “Long-term frontrunners such as Hong Kong, Reykjavik, Wellington and Budapest are holding firm but we have seen some new contenders rise up the rankings, most notably key Indian cities.”

Prices are not rising everywhere though; Taipei City, Athens, Milan, Singapore, Cape Town, Rio de Janeiro, Perth, Rome, Darwin and Johannesburg all fell, with oil town Aberdeen in Scotland the worst performer on the index, down -9.5 per cent.

European outlook

Ms Everett-Allen says European cities predominate at the bottom of the table, particularly in the southern European economies such as Greece, Cyprus and Italy.

Daniel Howarth, co-head of international at Ennes, a mortgage brokerage that recently opened an office in Dubai, says prime foreign investors living in the Middle East are right to be concerned about the slowdown in developed markets, amid political uncertainty in Europe. “They should keep a close eye on bellwethers like interest rates, tax changes and governmental upheaval and be prepared to move quickly if the property market moves against them,” he says.

Mr Howarth says banks are reacting faster than clients to mitigate the risk of property inflation. “Many international European banks fear over-exposure in key areas such as London, Paris and Zurich. Banks are discontinuing interest-only finance in these areas and demanding larger deposits to protect against forced sales during a price crash,” he says.

Europe is a particular concern as low interest rates and local wealth taxes encourage people to take on debt. “This accentuates the risk that many will fall into negative equity should the market move downwards," says Mr Howarth,  who suggests investors seek a fresh valuation for any investment property they own, especially if they bought a long time ago or have a high loan-to-value mortgage.

If it has fallen in value, he suggests paying down some of the debt, refinancing to a cheaper mortgage, or increasing your monthly repayments. “This should reduce the shortfall and give you more flexibility if you need to refinance in the future, when markets could be more unstable and banks less flexible.”

Mr Howarth says Europe still has plenty of opportunities, with little evidence of a bubble in the south of France, Monaco and northern regions of the UK. “These look solid compared to the artificial property inflation in many European capitals.”

He does not expect a financial meltdown along the lines of 2007 but says a market correction is likely at some point. “If clients cling to the frothy growth behind the capitals, they can expect to get their fingers burnt.”

The city leaders

Faisal Durrani, partner and head of research at property specialists Cluttons in Dubai, says Beijing has been tightening the screws by restricting the export of capital overseas, cooling the Chinese global buying spree.

Investors should understand both the global and local factors affecting specific markets. "Toronto, for example, has emerged as a clear preference for migrants and students, particularly from the Middle East, following Donald Trump’s election last year. This has underpinned the spike in values we are recording today. However, foreigners now face 15 per cent tax on foreign home buyers," says Mr Durrani.

In prime central London, values have been correcting for two years, down 4 per cent in that time, with Brexit and new residential taxes partly to blame. However, weaker sterling has also made property cheaper for overseas buyers. “The London population is growing rapidly, property supply is tight and domestic purchasers are hungry for "period" homes, which will forever remain in finite supply, so the market has a bright future.”

With parts of London delivering 300 per cent growth over the last 20 years it remains a draw for international property investors and some will even see recent weakness as a buying opportunity, Mr Durrani adds.

The Middle East markets

Figures from Cluttons show the local Dubai property market continues to stabilise, with residential values holding steady in 25 of the 32 locations it monitors.

Mr Durrani says the top of the market is under most pressure as investors and buyers are cautious of committing to luxury home purchases. “We are wary of the expected mismatch between planned supply and demand with an estimated 90,000 units due for completion before 2020, although experience suggests nearly a third will not be delivered in that timeline," he says.

He notes that although US$33 billion infrastructure and construction projects for Expo 2020 will generate jobs, these will mostly be middle to lower income households, while the planned stock appears aimed at the middle to top end of the market.

Dubai property looks set to end 2017 around 5 per cent lower, with similar slippage likely next year. “However, it may flatten out as the Expo 2020 effect filters through and lifts job creation rates,” Mr Durrani adds.

Residential values in Abu Dhabi are also under pressure as the government looks to rebalance the economy away from oil. “Households in Oman and Bahrain are focusing on affordable rental locations, driving down rents at the top of the market.”

The residential villa market remains buoyant in Sharjah. “It is now one of the best performing property asset classes in the region, underpinned by its relative affordability and high demand due to supply of this stock,” Mr Durrani adds.

Craig Plumb, head of research at JLL MENA, says after two years of falling prices there is no sign of a bubble in Dubai. "Prices could fall further due to oversupply but we do not expect all the planned projects to materialise, so any decline is likely to be minimal. We expect some price increases in Dubai by the end of 2018 but only 5 per cent at most,” he says.

The global property market may be showing bubble-esque signs, but the gentle deflation in Dubai suggests that locals have less to worry about. It may be a good thing that Dubai has lost its superstar reputation for now.

When Umm Kulthum performed in Abu Dhabi

Known as The Lady of Arabic Song, Umm Kulthum performed in Abu Dhabi on November 28, 1971, as part of celebrations for the fifth anniversary of the accession of Sheikh Zayed bin Sultan Al Nahyan as Ruler of Abu Dhabi. A concert hall was constructed for the event on land that is now Al Nahyan Stadium, behind Al Wahda Mall. The audience were treated to many of Kulthum's most well-known songs as part of the sold-out show, including Aghadan Alqak and Enta Omri.


July 5, 1994: Jeff Bezos founds Cadabra Inc, which would later be renamed to, because his lawyer misheard the name as 'cadaver'. In its earliest days, the bookstore operated out of a rented garage in Bellevue, Washington

July 16, 1995: Amazon formally opens as an online bookseller. Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought becomes the first item sold on Amazon

1997: Amazon goes public at $18 a share, which has grown about 1,000 per cent at present. Its highest closing price was $197.85 on June 27, 2024

1998: Amazon acquires IMDb, its first major acquisition. It also starts selling CDs and DVDs

2000: Amazon Marketplace opens, allowing people to sell items on the website

2002: Amazon forms what would become Amazon Web Services, opening the platform to all developers. The cloud unit would follow in 2006

2003: Amazon turns in an annual profit of $75 million, the first time it ended a year in the black

2005: Amazon Prime is introduced, its first-ever subscription service that offered US customers free two-day shipping for $79 a year

2006: Amazon Unbox is unveiled, the company's video service that would later morph into Amazon Instant Video and, ultimately, Amazon Video

2007: Amazon's first hardware product, the Kindle e-reader, is introduced; the Fire TV and Fire Phone would come in 2014. Grocery service Amazon Fresh is also started

2009: Amazon introduces Amazon Basics, its in-house label for a variety of products

2010: The foundations for Amazon Studios were laid. Its first original streaming content debuted in 2013

2011: The Amazon Appstore for Google's Android is launched. It is still unavailable on Apple's iOS

2014: The Amazon Echo is launched, a speaker that acts as a personal digital assistant powered by Alexa

2017: Amazon acquires Whole Foods for $13.7 billion, its biggest acquisition

2018: Amazon's market cap briefly crosses the $1 trillion mark, making it, at the time, only the third company to achieve that milestone

Strait of Hormuz

Fujairah is a crucial hub for fuel storage and is just outside the Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond.

The strait is 33 km wide at its narrowest point, but the shipping lane is just three km wide in either direction. Almost a fifth of oil consumed across the world passes through the strait.

Iran has repeatedly threatened to close the strait, a move that would risk inviting geopolitical and economic turmoil.

Last month, Iran issued a new warning that it would block the strait, if it was prevented from using the waterway following a US decision to end exemptions from sanctions for major Iranian oil importers.

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Engine: 2.0-litre four-cylinder turbo

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1 Jeff Bezos $140 billion
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What is graphene?

Graphene is a single layer of carbon atoms arranged like honeycomb.

It was discovered in 2004, when Russian-born Manchester scientists Andrei Geim and Kostya Novoselov were "playing about" with sticky tape and graphite - the material used as "lead" in pencils.

Placing the tape on the graphite and peeling it, they managed to rip off thin flakes of carbon. In the beginning they got flakes consisting of many layers of graphene. But as they repeated the process many times, the flakes got thinner.

By separating the graphite fragments repeatedly, they managed to create flakes that were just one atom thick. Their experiment had led to graphene being isolated for the very first time.

At the time, many believed it was impossible for such thin crystalline materials to be stable. But examined under a microscope, the material remained stable, and when tested was found to have incredible properties.

It is many times times stronger than steel, yet incredibly lightweight and flexible. It is electrically and thermally conductive but also transparent. The world's first 2D material, it is one million times thinner than the diameter of a single human hair.

But the 'sticky tape' method would not work on an industrial scale. Since then, scientists have been working on manufacturing graphene, to make use of its incredible properties.

In 2010, Geim and Novoselov were awarded the Nobel Prize for Physics. Their discovery meant physicists could study a new class of two-dimensional materials with unique properties. 


The Bio

Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity

yallacompare profile

Date of launch: 2014

Founder: Jon Richards, founder and chief executive; Samer Chebab, co-founder and chief operating officer, and Jonathan Rawlings, co-founder and chief financial officer

Based: Media City, Dubai 

Sector: Financial services

Size: 120 employees

Investors: 2014: $500,000 in a seed round led by Mulverhill Associates; 2015: $3m in Series A funding led by STC Ventures (managed by Iris Capital), Wamda and Dubai Silicon Oasis Authority; 2019: $8m in Series B funding with the same investors as Series A along with Precinct Partners, Saned and Argo Ventures (the VC arm of multinational insurer Argo Group)


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Macron’s Ensemble group won 245 seats.

The second-largest group in parliament is Nupes, a leftist coalition led by Jean-Luc Melenchon, which gets 131 lawmakers.

The far-right National Rally fared much better than expected with 89 seats.

The centre-right Republicans and their allies took 61.


Name: Akeed

Based: Muscat

Launch year: 2018

Number of employees: 40

Sector: Online food delivery

Funding: Raised $3.2m since inception

Director: Nag Ashwin

Starring: Prabhas, Saswata Chatterjee, Deepika Padukone, Amitabh Bachchan, Shobhana

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UAE currency: the story behind the money in your pockets

Company name: Sav
Started: 2021
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Investors: Angel investors

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Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through and

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December 2014: Former UK chancellor of the Exchequer George Osborne reforms stamp duty land tax (SDLT), replacing the slab system with a blended rate scheme, with the top rate increasing to 12 per cent from 10 per cent:

Up to £125,000 – 0%; £125,000 to £250,000 – 2%; £250,000 to £925,000 – 5%; £925,000 to £1.5m: 10%; More than £1.5m – 12%

April 2016: New 3% surcharge applied to any buy-to-let properties or additional homes purchased.

July 2020: Chancellor Rishi Sunak unveils SDLT holiday, with no tax to pay on the first £500,000, with buyers saving up to £15,000.

March 2021: Mr Sunak extends the SDLT holiday at his March 3 budget until the end of June.

April 2021: 2% SDLT surcharge added to property transactions made by overseas buyers.

June 2021: SDLT holiday on transactions up to £500,000 expires on June 30.

July 2021: Tax break on transactions between £125,000 to £250,000 starts on July 1 and runs until September 30.

Tips for travelling while needing dialysis
  • Inform your doctor about your plans. 
  • Ask about your treatment so you know how it works. 
  • Pay attention to your health if you travel to a hot destination. 
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Mr Kandhari is legally authorised to conduct marriages in the gurdwara

He has officiated weddings of Sikhs and people of different faiths from Malaysia, Sri Lanka, Russia, the US and Canada

Father of two sons, grandfather of six

Plays golf once a week

Enjoys trying new holiday destinations with his wife and family

Walks for an hour every morning

Completed a Bachelor of Commerce degree in Loyola College, Chennai, India

2019 is a milestone because he completes 50 years in business



Youngest debutant for Barcelona: 15 years and 290 days v Real Betis
Youngest La Liga starter in the 21st century: 16 years and 38 days v Cadiz
Youngest player to register an assist in La Liga in the 21st century: 16 years and 45 days v Villarreal
Youngest debutant for Spain: 16 years and 57 days v Georgia
Youngest goalscorer for Spain: 16 years and 57 days
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