Our renewed desire for urban experiences proved a shot in the arm for city property markets last year: all but four of the 30 prime global hotspots tracked by Savills saw year-on-year price gains, topped by Miami at a heady 25.4%.
The changed economic climate, however, has caused these rates to cool: the Savills Prime Residential Index: World Cities forecasts an average price growth of 0.5% during 2023. Recession, high interest rates and inflation have dovetailed to produce a slowdown, as buyers bide their time, yet a lack of supply and the appeal of prime cities during financial turmoil will cushion the fall.
“The second half of the year holds some potential for global economic growth,” says Paul Tostevin, head of Savills World Research. “A less active sales market will drive prime rental markets, with rental value growth expected to outstrip capital value growth this year.”
Of course, not all slowdowns are equal. The flow of high-net-worth individuals to the regional hubs of Dubai and Singapore is forecast to keep price growth there between 6% and 7.9%, the highest projected increase this year. And while Miami’s mooted 4%-5.9% is a hefty deceleration on last year, the same predicted figures for Milan suggest that the Italian economic centre will be Europe’s stellar performer.
The prime markets of New York, San Francisco, Los Angeles, Seoul, Amsterdam, Berlin, London and Sydney are forecast to see a decline this year, however small. The five Chinese mainland cities tracked will show a similar performance to that of 2022, with growth between 0% and 3.9%.
Global economic turmoil and the weakness of mainland China as it emerges from its zero-Covid policy will push Hong Kong into price falls of -7.9% to -6%. Yet even on the back of last year’s -8.5% dip, the city will remain the world’s most expensive place to buy a home.
Buoyant rental markets and the lifestyle appeal of southern European cities should see them perform more strongly: Rome, Madrid, Barcelona, Lisbon and Athens are expected to show modest positive price gains. The trend for remote working, a lower cost of living and the balmy climate all contribute to a sunny outlook.
Pictures from top: Barcelona from above (unsplash); Ocean Drive, South Beach, Miami, Florida (Alamy); the Galleria Vittorio Emanuele II in Milan (unsplash); elevated view of the new Dubai skyline including the Burj Khalifa (Alamy); the Odeon of Herodes Atticus in Athens (unsplash)