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The top five performing cities in 2023 were Manila, Mumbai, Shanghai, Seoul and Auckland
June 03, 2024 | Staff Reporter | Global | Property Management
Luxury residential real estate saw a surprising growth in 2023, with the Asia Pacific region commanding a prime position, a recent study has suggested. Despite global economic uncertainties, prime residential prices outdid anticipations, according to the latest The Wealth Report by Knight Frank.
While global luxury prices increased by a healthy margin of 3.1% in 2023, prices in Asia Pacific beat the Americas (with growth of 3.6%) to stand at 3.8%. Within the Asia Pacific region, the top five performing cities were Manila, Mumbai, Shanghai, Seoul and Auckland. Among the 100 markets tracked in Knight Frank’s Prime International Residential Index, 80 posted either flat or positive annual growth in price. The performance is particularly significant considering the successive hikes in interest rates.
Global Luxury
The impressive growth of the luxury residential markets across Asia Pacific was helped largely by the robust economies, favourable government policies and an increasing pool of affluent population opting for opulent living, the study said. Additionally, some markets which are considered as ‘safe havens’ (like Australia and Singapore) have been witnessing a rise in investments.
Despite prices being resilient through the year, sale volumes fell significantly in several key global markets. Luxury sales fell on average by 37% YOY in London, New York, Dubai, Singapore, Hong Kong and Sydney. Some markets, such as Auckland and Seoul, corrected after drastic declines, helped by the rapid rate hikes, while other markets climbed the rankings, in part due to supply shortages (Sydney and Singapore).
Surprising Growth
The study identified significant variation in prime prices across global residential markets. Prime prices in Dubai may be 134% higher than pandemic levels, but it is still much less compared to other established luxury residential markets. Therefore, while $1 million can buy only 16 square meters in Monaco, the same amount can buy 91 square meters in Dubai, four times the equivalent in Hong Kong. The similar was observed for second homes, where $1 million can buy 143 square meters in Barbados, which is over four times as much space in St Tropez.
This year could see a change in rules and regulations, as nearly 70 countries go to polls which can have implications for wealth flows and property markets. Market conditions have improved now, while inflation is also mostly under check. However, geopolitical conditions continue to be uncertain, with the possibility of escalating energy prices. GDP growth may also be weaker than 2023 levels. AI too is expected to add sophistication, personalization and efficiency, offer insights into client behavior, preferred destinations, lifestyle preferences and favored architects and developers.
