In France, the media is getting excited over real estate prices rising in Paris (+3% in 2016), but in Knight Frank’s index of great world cities, the French capital is only ranked 103rd! This index shows residential real estate prices are rising quickly in the great metropolises – real news getting too little attention. The global index has gone from 3% in the second quarter of 2015 to 6.5% in the fourth quarter of 2016 – an enviable performance, as interest rates are almost clinically dead. How many investments offer such performance today?

But, however, shouldn’t we worry about such a performance? Could it be a sign of a coming bubble? The overall increase is largely due to the Chinese cities – they take nine out of the ten first spots! Nankin is first with a 41.1% increase in 2016, followed by Wuxi (+35.7%), Shanghai (+31.7%), all the way to Guangzhou (9th, +24.3%), then Wellington (New Zealand) in tenth place with an increase of 23.7%. At the regional level, prices are progressing in Asia, North America and Europe, while they remain flat in South America, Russia and Africa.

This price explosion can be explained mainly by low interest rates, in a sector accustomed to move with the speed of a large ship. In China, in Europe and the United States, rates are low, which isn’t the case in South America, Russia and Africa. But a minimum of economic growth is required, along with rising demand, which explains why Japan, Italy (prices are declining in Rome, Milan and Genoa) and France are doing poorly. On the other hand, Oslo (12th, +21.7%), Toronto (13th, +19.8%), Budapest (15th, +19%) and Amsterdam (+14.5%) are doing quite well. China has more advantages, so to speak, with low rates, a still significant growth, an over-indebted and untrustworthy banking system, and the impossibility of foreign investments due to exchange controls. So all there is left is real estate… and gold, of course, for which the Chinese have a strong appetite.