According to The Wealth Report, Knight Frank’s flagship research report – prime residential prices surprised on the upside in 2023. Of the 100 markets tracked in Knight Frank’s Prime International Residential Index (PIRI), 80 recorded flat or positive annual price growth. Luxury prices climbed 3.1% on average in 2023 – a solid gain overall. Manila (26%) leads the rankings but Dubai (16%), last year’s frontrunner only slipped one spot. The Bahamas (15%) comes in third place with the Algarve 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 are close behind (3.3%) and prime prices in the city market tracked have risen 2.7% on average.
Liam Bailey, global head of research at Knight Frank said: “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.”
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).
Keith Ooi, group managing director at Knight Frank Malaysia mentioned that: “Amidst global shifts in financial landscapes, the luxury market has witnessed a significant downturn, with sales plummeting by an average of 37% year-on-year across prominent cities like London, New York, Dubai, Singapore, Hong Kong, and Sydney. This trend underscores the profound impact of rising debt costs on consumer behaviour. As markets adapt to this new reality, it’s imperative for industry players to assess the implications on a global scale, including its relevance to the Malaysian market, where similar economic dynamics may influence luxury consumption
patterns.”
