Property consultancy Savills has released insights from its report that investigates the top global cities forecast to see the strongest growth in the prime residential property sector throughout the year.
Savills found that Dubai continues to have 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 sq ft, it 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 stated in the report.
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.”
Kelcie Sellers, Associate, Savills World Research
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% to 5.9%.
“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.”
Andrew Cummings, Head of Residential Agency, Savills Middle East
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.
“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.”
Kelcie Sellers, Associate, Savills World Research
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.
“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.”
Kelcie Sellers, Associate, Savills World Research
