This year is set to be a slower one for global prime residential markets, following a surprisingly resilient 2023. Average prime capital value growth of just 0.6% is forecast across major global cities, down on the 2.2% growth recorded last year.
The slowdown comes as the rapid rebound seen in prime residential markets across the world in the wake of the pandemic has abated. Even though prime residential property is less mortgage-reliant, many potential buyers and sellers are adopting a ‘wait and see’ approach in the higher interest rate environment. In addition, 2024 is a big election year with 40% of the world’s population going to the polls, so some buyers will likely await clarity on any changes to policy these may bring.
The big beneficiary will be rental markets, expected to continue to outpace sales markets as would-be-buyers turn to renting, competing for a limited pool of prime rental stock.
Nonetheless, depending on their timing and depth, anticipated central bank interest rate cuts during 2024 could boost sales activity and could surprise on the upside for pricing in the latter part of the year. Looking ahead, a loosening of monetary policy would support a broader pivot in global property markets, unlocking more sustained growth from 2025.
Prime residential capital value growth
World city average
Source: Savills Research
World City forecasts
Of the 30 major global cities Savills monitors, 17 will record slower capital value growth in 2024 than in 2023.
Some of 2023’s standout cities are still set to grow, but at a slower pace; notably Dubai, Tokyo, Athens, Mumbai and Bangkok. Elsewhere, prime prices will grow only very modestly or turn negative in Chinese cities where a slowing domestic economy and weak sentiment is dampening demand. Prime falls of more than 10% are expected in Hong Kong, though efforts are already being made to stimulate markets through cuts to stamp duties.
There are bright spots. Markets with comparatively lower price points, relative to other world cities, look likely to perform well over the coming year. Cape Town, Barcelona, Madrid, and Kuala Lumpur each offer prime prices per square foot below $800. All four cities are forecast to see growth of between 2% and 3.9% in 2024.
World City prime residential capital value growth forecasts
Source: Savills Research
Global residential markets to watch in 2024
Australia: The housing market continues to defy Australia’s higher interest rate environment, with a strong demographic story supporting further price growth in 2024. At the city level, Sydney is forecast to see prime capital values rise by between 8% and 9.9% this year, the highest of any of our 30 World Cities. Low levels of supply, strong domestic demand and a return of some international and ex-pat buyers are fuelling price appreciation in this land-constrained city.
United Arab Emirates: Dubai’s residential sector recorded its best year on record in 2023. Transactions grew by 29% to surpass 100,000 for the first time, while prices increased by 17.4%, pushing values above their 2014 peak. In spite of this, prime prices are still low by world city standards ($850 per sq ft on average) and growth is expected to continue, but at a slower pace (4% to 5.9%). Neighbouring Abu Dhabi is a city to watch as new high quality prime projects come to market.
Spain: The country’s prime market has proved resilient in spite of economic headwinds, underpinned by a shortage of quality prime supply and a diverse demand base. Madrid and Barcelona offer prime prices under $800 per sq ft and buyers from across Europe, the Middle East and Latin America complement strong levels of domestic demand. Continued, but modest, levels of price growth are anticipated in the prime markets of both cities in 2024, forecast at between 2% and 3.9%.
Italy: A recovery in tourism coupled with a desire for city living is supporting demand across all types of prime property in Italy’s historic urban centres. Rome is set to outperform, with forecast prime price growth of between 2% and 3.9% in 2024 amidst extremely constrained supply. The second home hotspots of Tuscany, Sardinia and the Italian Lakes, meanwhile, are seeing a surge of activity as the spectrum of domestic and international buyers broadens.
French Riviera: A long established prime enclave attractive to a global base, the Côte d’Azur was our top ranking global second home destination last year. Buyers in recent years have been younger and are more inclined to favour areas with easy access to entertainment, airports and amenities, while domestic purchasers have grown in prominence. Average prime prices per square foot nearly stand at nearly $2,500 across the region. Prospects are good for 2024 as well, as international eyes again turn to France in this Olympic year.
You can read more about recent and forecast performance in the prime residential markets of global cities in Savills Prime Residential Index: World Cities.
