2024 Wealth Report: Luxury Residential Markets Proved Resilient in 2023

According to  The Wealth Report ,  Douglas Elliman and 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. View full report. “At the start of 2023, economists were expecting a much weaker outcome across global residential property markets,” said Kate Everett-Allen, Head of International Residential and Country Research at Knight Frank. “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.” 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). 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. “As wealth portfolios recovered in 2023, affluent buyers targeted residential property in the world’s luxury markets,” said Liam Bailey, Global Head of Research at Knight Frank. “While 24% of global UHNWIs were active in the market, inventory was down by almost a third, adding upwards pressure to prices.” Knight Frank’s Prime International Residential Index (PIRI 100) Annual change in luxury residential prices in 2023: Global top 10 No. Location Annual % change 1 Manila 26.3 2 Dubai 15.9 3 The Bahamas 15.0 =4 Algarve 12.3 =4 Cape Town 12.3 =6 Athens 12.0 =6 Ibiza 12.0 8 Mumbai 10.0 9 Shanghai 8.6 10 Mustique 8.0 On an annual basis, Knight Frank provides a guide to how much space you can buy for US$1 million. There is a significant variation in prime prices across luxury residential markets. Prime prices in Dubai may sit 134% higher than at the start of the pandemic but are still noticeably lower than in more established markets. Here, US$1 million buys 91 sq m, four times the equivalent in Hong Kong. How many sq m of prime property US$1m buys in selected city and second home markets:  Cities How many square meters US$1m buys in….  Monaco 16  Hong Kong 22  Singapore 32  London 33  Geneva 34  New York 34  Los Angeles 38  Paris 40  Shanghai 42  Sydney 43  Miami 60  Tokyo 64  Dubai 91  Madrid 96  Mumbai 103   Second home markets How many square meters US$1m buys in…. Aspen                                   20 Verbier                                   28 St Tropez                                   32 Ibiza                                   50 The Bahamas                                   62 Chamonix                                   63 Quinta do Lago                                   67 Lake Como                                   91 Marbella                                 101 Barcelona                                 110 Gold Coast                                 112 Provence                                 129 Barbados                                 143 Cape Town                                 196 Phuket                                 213   Source: Knight Frank Research, Douglas Elliman, Ken Corporation. Currency calculation as at 29 December 2023