Knight Frank’s latest flagship research report, The Wealth Report, unveils a surprising resilience in prime residential markets across the globe amidst economic fluctuations in 2023. The report highlights a notable uptick in luxury property prices, with 80 out of 100 markets tracked in the Knight Frank’s Prime International Residential Index (PIRI) registering either flat or positive annual price growth.
Luxury prices experienced a commendable 3.1% average increase globally, indicating a solid gain overall. Manila emerged as the frontrunner, leading the rankings with a remarkable 26.3% surge, followed closely by Dubai with a 15.9% climb. The Bahamas secured the third spot with a 15.0% rise, while the Algarve and Cape Town shared the fourth position, both boasting a 12.3% increase.
The Asia-Pacific region outpaced the Americas as the strongest-performing world region, with a 3.8% rise compared to 3.6%. Sun-soaked locations continued to outperform city and ski markets, recording an average increase of 4.7%. Ski resorts followed closely behind with a 3.3% rise, while prime prices in urban markets tracked saw a 2.7% average growth.
Knight Frank’s global head of research, Liam Bailey attributed this growth to the recovery of wealth portfolios, as affluent buyers targeted luxury properties worldwide. However, the report noted a significant decrease in sales compared to prices, particularly evident in prominent cities like London, New York, Dubai, Singapore, Hong Kong, and Sydney, where luxury sales plummeted by an average of 37% year-on-year.
Knight Frank Malaysia’s group managing director, Keith Ooi emphasised the impact of rising debt costs on consumer behavior, underscoring the importance of assessing global economic dynamics on luxury consumption patterns, including its relevance to the Malaysian market.
Knight Frank’s Prime International Residential Index (PIRI 100)
Annual change in luxury residential prices in 2023: Global top 10
No. Location Annual % change 1 Manila 26.3 2 Dubai 15.9 3 The Bahamas 15.0 =4 Algarve 12.3 =4 Cape Town 12.3 =6 Athens 12.0 =6 Ibiza 12.0 8 Mumbai 10.0 9 Shanghai 8.6 10 Mustique 8.0
Meanwhile, Knight Frank Property hub at Malaysia, associate director of international residential, Dominic Heaton-Watson highlighted the resilience of markets like New York and London, which saw only marginal dips in prices, presenting opportunities for prospective buyers. He also noted Iberia’s prominence in the top rankings, with the Algarve and Ibiza leading the pack.
“Prices in both New York and London only 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.”
“Current market conditions signal a significant improvement compared to a year ago. With inflation largely under control, the focus now shifts to the timing of interest rate cuts, emphasizing certainty rather than speculation. Labour markets remain robust, and the absence of forced sellers contributes to stability. Additionally, constrained housebuilding has provided a buffer against escalating prices, while pandemic-induced savings continue to bolster economic resilience,” Heaton-Watson said.
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.
How many sq m of prime property US$1m buys in selected city and second home markets:
Cities How many square metres US$1m buys in…. Monaco 16 Hong Kong 22 Singapore 32 London 33 Geneva 34 New York 34 Los Angeles 38 Paris 40 Shanghai 42 Sydney 43 Miami 60 Tokyo 64 Dubai 91 Madrid 96 Mumbai 103 Second home markets How many square metres US$1m buys in…. Aspen 20 Verbier 28 St Tropez 32 Ibiza 50 The Bahamas 62 Chamonix 63 Quinta do Lago 67 Lake Como 91 Marbella 101 Barcelona 110 Gold Coast 112 Provence 129 Barbados 143 Cape Town 196 Phuket 213
As the report provides insights into prime property prices globally, it also offers a comparative guide on how much space US$1 million can buy in selected city and second home markets. With significant variations across markets, this data underscores the diversity in prime residential offerings worldwide.
In conclusion, despite economic uncertainties, the prime residential market has demonstrated resilience, with luxury prices showing notable gains and markets adapting to evolving conditions.
Source: Knight Frank Research, Douglas Elliman, Ken Corporation. Currency calculation as of 29 December 2023.
