Price Growth in International Cities Set to Slow, but Trophy Properties Will Help Protect Prime Markets
Although international luxury real estate markets are set to take a hit in 2023, the lack of available blue-chip properties will help keep prime prices afloat, according to Savills.
Indeed, high-end residential real estate is expected to see an average price growth of 0.5% this year in the 30 global cities tracked in Savills’s Prime Residential World Cities Index, released Wednesday.
“Recessionary conditions, a higher interest-rate environment and inflation will weigh on prime residential performance, although the second half of the year holds some potential for global economic growth,” Paul Tostevin, head of Savills World Research, said in the report. “The forecast growth of 0.5% is some way down on the 3.2% saw last year, however, the rarefied nature of prime residential coupled with a lack of stock, will prevent a sharper slowdown.”
More than half of the cities analyzed are set to see slower growth than last year, with several seeing prices fall.
“However, 13 out of the 30 are forecast to record equal or even slightly enhanced growth in 2023,” the report said.
The top destinations are Dubai and Singapore, which are predicted to see price growth of between 6% and 7.9% in 2023, the data showed. That’s down from 12.4% and 6.8%, respectively, in 2022.
Miami and Milan are next, with a forecast of 4% to 5.9% growth this year, according to the report. For Miami, that’s a huge drop from the 25.4% recorded in 2022, but it’s on par with last year’s growth in Milan, which was the top-performing market in southern Europe last year.
These cities have seen a significant migration of high-net-worth individuals, and are set to continue to do so, the report said. Wealthy individuals are not immune to economic headwinds, but limited supply of quality inventory is protecting prices from falling too much.
Hong Kong is expected to see the biggest drop in prices in 2023, between 6% and 7.9%, compared to a 8.5% decrease in 2022, the figures show. The city is still the world’s most expensive prime residential market, the report said.
San Francisco and Sydney followed, and prices are predicted to drop between 4% and 5.9%, compared to falls of 5.2% and 3.7%, respectively.
