Dubai has emerged as the leading city in the prime residential property market.
The city recorded a capital value increase of 17.4% over the past year, significantly outstripping the 2.2% average price growth observed across 30 global cities in the Savills Prime Residential World Cities Index.
Despite this impressive growth, Dubai remains affordable globally at $850 per square foot, attracting international and domestic buyers with its competitive pricing, low cost of living, straightforward visa process, and warm climate.
Other cities in the Asia Pacific region, particularly Mumbai, have also seen substantial growth in capital values in 2023. However, global economic turbulence has negatively impacted some cities, especially in the latter half of the year.
New York and San Francisco have experienced declines due to a slow return to office work and ongoing tech industry challenges, respectively.
Political and economic uncertainties have affected Hong Kong’s prime residential market, leading to a 3.7% decrease in capital values over the year.
Savills predicts that the prime residential property market in global cities will continue to see positive growth in 2024, albeit at a reduced pace of 0.6%.
This forecast reflects a normalization of the market following two years of significant gains. Sydney and Dubai are expected to be the top performers, driven by increasing demand from their expanding high-net-worth populations.
Sydney’s market is likely to see prices rise by 8%-9.9% due to a supply-demand imbalance, while Dubai’s growth is expected to moderate to 4%-5.9%.
Dubai’s success is attributed to its maturing city profile, world-class infrastructure, safety, security, and government visa reforms, which have boosted demand.
However, prime residential markets in cities like Los Angeles, New York, San Francisco, Seoul, London, Singapore, and Hong Kong will face price declines due to higher interest rates and challenging economic conditions.
The potential for central banks to cut interest rates in mid to late 2024 could invigorate the prime property markets, potentially leading to higher-than-expected price increases towards the year’s end.
Additionally, Dubai has seen rental price increases of nearly 10%, surpassing the 5.1% average among other global cities.
Lisbon leads in prime rental growth with a 39% increase last year, demonstrating the resilience of the prime residential rental market amidst economic uncertainty, driven by a lack of stock and increased demand from those delaying property purchases.
While the global prime residential market is expected to slow down in 2024, certain cities like Sydney and Dubai are poised for continued growth, buoyed by their attractive offerings and robust demand. The overall market remains resilient, with the potential for positive surprises in pricing as economic and interest rate conditions evolve.