Global analysis of prime property prices across major cities has shown that Dubai is projected to lead prime sales for another year, while top-end London homes are expected to fare worst.
Knight Frank tracked price growth in prime property sales across 25 cities in 2022 and found that overall, prime residential property has performed better than expected.
In June 2022, a 4% price growth was forecast for the remaining six months of the year, but by November that estimate rose to 5.2%.
A higher proportion of cash buyers was partly responsible for surprising growth in the global prime market, explains Kate Everett-Allen, Knight Frank’s head of international residential research.
Meanwhile, the re-opening of many global cities to workers, tourists and students was also a boost to growth.
Global prime property prices: which cities have seen the largest growth?
The stronger-than-expected growth of 2022 was driven in no small part by Dubai, where a tight supply of prime stock, combined with large inflows of HNWs, had a huge impact.
Dubai prime property saw estimated price growth of a whopping 50% last year.
Data from Dubai-based Morgan’s International Realty shows that in Q4 of 2022, there were 752 prime sales, 164% higher than the same period in 2021.
“Due to its stable economy and absence of property and income taxes as well as its safety, Dubai’s property market is affordable and appealing to international investors which we think is the biggest factor in price growth,” says Elias Hannoush, CEO of Morgan’s.
This year, Dubai is projected to lead the ranking again, though with a rather more modest 13.5% growth.
Hannoush says Morgan’s anticipates a very high level of activity in the prime Dubai market as developers gear up to launch massive new developments, such as Palm Jebel Ali.
Miami, Los Angeles and Dublin all saw strong growth of upwards of 8% in 2022, and are forecast to lead global cities in the coming year, with growth of around 4%.
Fear of a recession, and rising fixed mortgage rates, may however serve to quash this estimate.
On the opposite end of the leaderboard, Auckland saw prime property prices fall by 14% in 2022. This was due to a spate of interest rate hikes that saw sales volumes drop by 40% between November 2021 and 2022.
In 2023, Auckland has forecast no growth, as is Berlin, Geneva and Sydney.
Meanwhile, London is anticipated to fare worst globally, with a projected 3% fall in prime prices, triggered by wider recessionary pressures.
The future of global prime property prices
While prime residential property prices outperformed in 2022, the overall forecast isn’t so optimistic for this year.
However, any declines seen in London and elsewhere are unlikely to make a dent compared with the huge growth seen in the past two years.
"Prime prices would need to fall a further 30-40% in some cities for prices to return to their pre-pandemic levels of 2019," Everett Allen says.
This article originally appeared in Spear's.