Reading a price per square metre

Monaco costs fifty-five thousand a square metre and Vienna twenty. That sentence is true, useful and wrong. It is true as an average of asking prices, useful for a first sense of where a budget goes, and wrong the moment it is applied to a particular apartment, because the square metres it counts are not the same square metres, and because the thing being bought at the top is not area.

What the number counts

Which metres

Spain counts built area including walls and often the terrace at half. France counts the loi Carrez area, habitable, floor to ceiling above 1.8 metres. Germany counts Wohnfläche, with balconies at a quarter to a half. New York counts whatever the sponsor's architect measured, which can be a fifth larger than the rooms. The same apartment can be a tenth smaller from one country to the next.

Which price

Asking, mostly. Closed prices are public in England, the United States and increasingly in Spain; private elsewhere. Asking prices in prime markets run five to fifteen per cent above closed ones, more in a slow year.

Which sample

The apartments and houses that were listed. The best of every hotspot never was, so the top of the range is missing from every published index, including for the most part this one.

What it hides

At the top of a market the buyer is not paying for area. They are paying for frontage, for a licence, for a view that is finite and known, for a building with a porter, for a plot that cannot be built on again. Two houses on the same road in the southwest of Mallorca can differ by a third per square metre because one sees the sea from the sofa and the other from the roof. The number treats them as the same house with different finishes, and the market does not.

+30%

The premium for a sea view from the main rooms over the same house second line, in the Balearics

+15 to 20%

The premium for a valid tourist licence on Ibiza

×2

Frontline over first line on a cape of the Riviera, and more

−10%

What a fifth floor without a lift is worth against the same floor with one, in Paris

How the Ranesta Index uses it

The index on every hotspot page gives a prime band, which is the range in which the desk sees serious houses asked and agreed in the best districts, and a trophy level, which is the number the rare frontline or top-floor sale reaches. It is an editorial estimate, updated quarterly and dated, not a valuation. It is useful for exactly one thing: telling a buyer with a budget where that budget is large and where it is merely adequate. The budget instrument does that across all twenty-two places at once.

A square metre in Monaco is a square metre of jurisdiction. A square metre on Cap Ferrat is a square metre of coastline. Neither is a square metre of apartment.

Why the number fails at the top

How to use it anyway

Measure something. One room with a tape, against the plan. If the plan is a tenth generous, the price per square metre is a tenth optimistic.
Price against closed sales, not listings. The desk knows them; in transparent markets they are public.
Separate the land from the house. On a coast, the plot with its rights is the value; the house is a finish that the next owner may replace.
Ask what the premium is for, and whether it survives a downturn. Views and licences do; finishes and fashions do not.

Run the numbers

Budget Across the Map

One budget, twenty-two hotspots: how many square metres of prime it buys in each.

Open the instrument