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.
“Along with rising prices, we have also seen an increase in the number of properties that have traded in the prime market. The favourable currency for foreigners, as well as unmatched value for money lifestyle continues to attract both local and international buyers to Cape Town,” said
Nick Gaertner, director and COO of Knight Frank South Africa.
“With the city being well managed relative to the rest of South Africa, together with its prime location regarding its proximity to some of the world’s best known winelands, mountain trails and Blue Flag beaches, the influx of buyers and resulting upward price shift is expected to continue for the foreseeable future.” Gaertner adds.
“At the start of 2023, economists were expecting a much weaker outcome across global residential property markets. Stock markets were heading for more pain, inflation was veering out of control and the pandemic-fuelled property boom was set to end in tears as borrowing costs hit 15-year highs in some markets. However, that never happened – we’ve seen a much softer landing in terms of price performance around the world,” Kate Everett-Allen, head of international residential and country research at Knight Frank says.
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).
Cape Town’s luxury residential market proved resilient in 2023 despite successive interest rate hikes.
Prices in both New York and London 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.
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.”
