Most positive outlook for Dubai & Singapore
Of the 30 major global cities in the Savills index, 17 will record slower growth than in 2022, with several posting declines. However, 13 out of the 30 are forecast to record equal or even slightly enhanced growth in 2023.
The regional hubs of Dubai and Singapore are forecast to top the global price charts in 2023. Both cities will continue to see sustained inflows of high-net-worth individuals, however they are not immune to higher interest rates and wider economic headwinds. Dubai’s forecast prime price growth of between 6% and 7.9%, for example, is muted compared with the 12.4% growth it recorded in 2022.
Similarly, Miami’s predicted prime capital value growth of between 4% and 5.9%, driven by a lack of supply at the top end of the market, is a significant downgrade on the 25.4% growth it recorded last year.
Low to modest levels of capital value growth are forecast in the southern European cities of Lisbon, Athens, Rome, Milan, Barcelona and Madrid, where prime property is particularly coveted as a safe haven asset and inflation hedge in times of economic turmoil.
With capital value growth of 5.7%, Milan was southern Europe’s top performer in 2022 and it is expected to cement its position this year, with a price growth of between 4% and 5.9%.
Some cities felt global economic turbulence more than others, particularly in the second half of 2022. Rising interest rates hit Sydney particularly hard and Hong Kong’s lingering pandemic-related restrictions continued to hamper its prime residential markets.
Prime prices in Hong Kong fell by -8.5% in 2022 and global macro conditions are set to have further impact on the market with price falls of between -7.9% and -6% expected. However, the city will remain the world’s most expensive prime residential market at $4,070 per square foot.
Seoul and Tokyo were the two strongest performing cities in the Asia Pacific region last year, with prime prices rising 4.9% and 4.1% respectively.
With annual growth in 2022 ranging from +3% to -2%, the picture is mixed across major Chinese cities. The easing of Covid-19 restrictions towards the latter half of the year saw improved performance in the second half of 2022 in Hangzhou (1.8%) and Shanghai (2.0%).
However, nationally low prime property volumes, the indebted real estate sector, weak consumer confidence and slower economic growth have all put downward pressure on price growth compared to previous years. Nevertheless, growth of up to 3.9% is forecast in the five mainland Chinese cities in the Savills index.