Dubai continues to be the hottest prime residential property market, with capital values increasing 17.4% for the year, with a more modest 5.6% recorded in the second half. This performance is recorded against an average price growth of 2.2% across 30 global cities covered in the Savills Prime Residential World Cities Index.
The (Dubai) market is still relatively competitively priced by global standards, at $850 per square foot, offers a comparatively low cost of living, a relatively easy visa process, and a warmer climate, which continues to attract international and domestic buyers, Savills researchers said in the report.
Other Asia Pacific cities led capital values growth in 2023, with Mumbai leading the pack. Meanwhile, some cities felt global economic turbulence more than others, particularly in the second half of 2023. New York and San Francisco, with the former seeing a muted return to office and the latter still weathering tech-turbulence, recorded some declines for the full year. Hong Kong’s ongoing political and economic uncertainty continued to hamper its prime residential markets, with capital values falling 3.7% over the year.
Looking ahead into 2024, capital values for global cities will remain in positive territory, Savills says. Prime residential price growth of a modest 0.6% is forecast across the 30 global cities monitored by Savills, down from the 2.2% achieved in 2023.
“In the face of ongoing economic uncertainty and a higher interest rate environment, prime residential markets in world cities were muted in 2023 following two years of significant gains. Growth is forecast to slow further in 2024 as markets return to more normal conditions, but will broadly remain in positive territory,” said Kelcie Sellers, Associate, Savills World Research.
Sydney and Dubai to see the strongest forecast growth in 2024
Sydney and Dubai are forecast to be the two top performers for the year ahead, with both cities set to benefit from increases in their high-net-worth populations. Sydney is seeing high levels of demand for quality prime homes, but supply remains low. It’s likely that this imbalance will persist through 2024 and push up prices, which are forecast to increase by 8%-9.9%.
Dubai increased by a significant 17.4% over the year, but it’s likely that this rate of growth will slow this year as it returns to more normal activity. Savills anticipates prices to grow in the emirate by a further 4%-5.9%.
Andrew Cummings, Head of Residential Agency at Savills Middle East commented, “Dubai’s continued success owes much to the continuing maturity of the city. With world-class infrastructure alongside safety and security, Dubai is rapidly cementing its status as the number one lifestyle destination. An undersupply of ready property, combined with the development of new high-quality developments, is leading to increased pricing. The diverse nature of Dubai buyers means that demand continues to be robust. Meanwhile, further government visa reforms, including reducing the spending requirements to secure a ten-year golden visa, have further boosted demand in the sector.”
Savills World Cities Prime Residential Index: 2023 prime capital value growth forecast vs capital growth value in 2023
| City | 2024 Forecast | Capital value growth in 2023 | Prime capital value Dec 2023 (US$ psf) |
| Sydney | +8% to 9.9% | 6.8% | $ 1,830 |
| Dubai | +4% to 5.9% | 17.4% | $ 750 |
| Cape Town | +2% to 3.9% | 3.1% | $ 250 |
| Tokyo | +2% to 3.9% | 8.2% | $ 1,950 |
| Rome | +2% to 3.9% | 3.3% | $ 1,410 |
| Kuala Lumpur | +2% to 3.9% | -1.0% | $ 250 |
| Athens | +2% to 3.9% | 6.1% | $ 1,130 |
| Madrid | +2% to 3.9% | 4.0% | $ 750 |
| Barcelona | +2% to 3.9% | 3.4% | $ 680 |
| Amsterdam | +2% to 3.9% | -2.4% | $ 960 |
| Geneva | >0% to 1.9% | 1.8% | $ 2,550 |
| Milan | >0% to 1.9% | 2.5% | $ 1,520 |
| Lisbon | >0% to 1.9% | 1.6% | $ 1,330 |
| Bangkok | >0% to 1.9% | 9.1% | $ 1,050 |
| Mumbai | >0% to 1.9% | 10.3% | $ 1,140 |
| Miami | >0% to 1.9% | 4.9% | $ 1,510 |
| Beijing | 0.0% | 2.1% | $ 1,520 |
| Shanghai | 0.0% | 4.3% | $ 2,060 |
| Los Angeles | -1.9% to <0% | -2.2% | $ 1,550 |
| Berlin | -1.9% to <0% | -3.5% | $ 1,150 |
| Seoul | -1.9% to <0% | 0.8% | $ 1,730 |
| Guangzhou | -1.9% to <0% | 2.1% | $ 1,510 |
| Hangzhou | -1.9% to <0% | 0.9% | $ 1,230 |
| London | -1.9% to <0% | -0.9% | $ 1,920 |
| Paris | -1.9% to <0% | -2.7% | $ 1,550 |
| Shenzhen | -1.9% to <0% | -4.9% | $ 1,530 |
| New York | -1.9% to <0% | -3.7% | $ 2,560 |
| San Francisco | -3.9% to -2% | -6.1% | $ 1,400 |
| Singapore | -3.9% to -2% | 1.3% | $ 1,800 |
| Hong Kong | -10% or lower | -2.0% | $ 3,970 |
Source: Savills Research
Suffering from weaker sentiment associated with higher interest rates and the challenging economic backdrop, the prime residential markets of Los Angeles, New York, San Francisco, Seoul, London, Singapore, and Hong Kong are all forecast to see price falls this year.
Sellers says, “We expect it to be a year to watch the markets globally. Countries which account for approximately 40% of the global population will go to the polls this year, and housing will likely be front of mind for many voters and policymakers alike. The potential for central banks to also cut interest rate during mid to late 2024 may also boost activity across prime property markets and could surprise on the upside for pricing in the latter part of the year.”
Rental performance and yields
Dubai also recorded rental price increases during the year at a little under 10%, versus the average 5.1% recorded among other global cities in the Savills index.
Lisbon led prime rental growth among the 30 cities in the index, increasing 39% last year.
Commenting on rentals, Sellers said, “In the face of economic uncertainty, the prime residential rental market proved resilient in 2023. Continuing a trend from the past year, prime rental value growth outpaced capital values, largely driven by a lack of stock in global prime markets and increased levels of demand from individuals and families who would look to purchase a property, but are holding off until the economic and interest rate situations stabilise.”
In terms of yields, Dubai stands out as a high yielding city by world city standards, with returns of 4.8%. Across all world cities, prime gross yields stood at 3.1% as global rental markets recorded stronger growth than the sales markets.
The cost of buying, holding, and selling a property in Dubai is also among the lowest, at less than 10% of the property purchase price, versus 15%, on average, across the 30 global cities.
About Savills Middle East:
Savills plc is a global real estate services provider listed on the London Stock Exchange. With a presence in the Middle East for over 40 years, Savills offers an extensive range of specialist advisory, management and transactional services across the United Arab Emirates, Oman, Bahrain, Egypt, and Saudi Arabia. Expertise includes property management, residential and commercial agency services, property and business assets valuation, and investment and development advisory. Originally founded in the UK in 1855, Savills has an international network of over 700 offices and associates employing over 40,000 people across the Americas, UK, Europe, Asia Pacific, Africa, and the Middle East.
