Prime residential prices surprised on the upside during 2023, according to Knight Frank’s flagship The Wealth Report.
Of the 100 markets tracked in Knight Frank’s Prime International Residential Index (PIRI), 80 recorded flat or positive annual price growth with luxury prices having climbed 3.1% on average in 2023 – a solid gain overall.
Manila (Philippines) leads the rankings with 26% but Dubai (16%), 2022’s frontrunner, only slipped one spot. The Bahamas (15%) came in at third place with the Algarve (Portugal) and Cape Town (both 12.3%) completing the top five.
Asia-Pacific (3.8%) pipped the Americas (3.6%) to the title of the strongest-performing world region, with Europe, the Middle East and Africa trailing (2.6%). Sun locations continue to outperform city and ski markets, up 4.7% on average. Ski resorts came in close behind at 3.3% while prime prices in the city market tracked rose 2.7% on average.
“Along with rising prices, we have also seen an increase in the number of properties that have traded in the prime market. The favourable currency for foreigners, as well as unmatched value for money lifestyle continues to attract both local and international buyers to Cape Town. With the city being well managed relative to the rest of South Africa, together with its prime location regarding its proximity to some of the world’s best-known winelands, mountain trails and Blue Flag beaches, the influx of buyers and resulting upward price shift is expected to continue for the foreseeable future,” comments Nick Gaertner, Director, and COO of Knight Frank South Africa.
As markets adjusted to the higher cost of debt, sales took a bigger hit than prices. In London, New York, Dubai, Singapore, Hong Kong, and Sydney luxury sales declined on average by 37% year-on-year. Some markets corrected after strong falls due to rapid rate hikes (Auckland, Seoul), while others moved up the rankings in part due to supply shortages (Sydney, Singapore). Some were influenced by policy and tax shifts, easing (Hong Kong), or tightening (Los Angeles), and some markets benefited from significant wealth inflows (Dubai, Miami).
Prices in both New York and London dipped around 2% in 2023 and sit 8% and 17% below their most recent peaks respectively, presenting a strong opportunity for prospective buyers. Iberia proved a hotspot, occupying five of the top 20 rankings with the Algarve (12.3%) and Ibiza (12%) leading the pack.
“As wealth portfolios recovered in 2023, affluent buyers targeted residential property in the world’s luxury markets. While 24% of global UHNWIs were active in the market, inventory was down by almost a third, adding upwards pressure to prices,” says Liam Bailey, global head of research at Knight Frank.
Knight Frank’s Prime International Residential Index (PIRI 100)
Annual change in luxury residential prices in 2023: Global top 10
On an annual basis, Knight Frank provides a guide to how much space you can buy for US$1 million. There is a significant variation in prime prices across luxury residential markets. Prime prices in Dubai may sit 134% higher than at the start of the pandemic but are still noticeably lower than in more established markets. Here, US$1 million buys 91 sq m, four times the equivalent in Hong Kong.
