Last year, many analysts anticipated plummeting markets as interest rates soared continually. However, luxury residential markets showed surprising resilience, with prices maintaining their upward trend and several destinations posting double-digit upticks.
Resilient luxury residential markets
A recent Knight Frank report on high-end property markets worldwide in 2023 has found that resilience was the watchword last year. The company’s Prime International Residential Index “surprised on the upside in 2023”, with 80% of destinations showing positive or flat growth.
Overall, the Index registered 3.1% growth despite spiralling interest rates across the globe last year. In some cases, rate hikes reached their highest in 15 years. However, Knight Frank reports that the “’soft landing’ adage applied as much to luxury property markets as to monetary policy”.
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Best performers by region
Asia Pacific had the best-performing luxury residential markets last year, with an average rise of 3.8% in prices across the region. Manila saw the highest increase, and prices for high-end homes in the Philippine capital soared by 26% in 2023. Other hotspots were Mumbai and Shanghai.
The Americas, headed by the Bahamas and Mustique, stood in second place. Prices rose generally in the region by 3.6%. EMEA experienced lower increases, with an average of 2.6%. Stand-out locations here were the Algarve, Cape Town and Athens.
Best performers by location
Manila and Dubai led the price rises for luxury residential property, experiencing a 26% and 16% surge, respectively. However, other locations saw the reverse trend. For example, high-end real estate prices fell by 2% in London and New Year. Nonetheless, they’re still considerably below the recent highs. As a result, both cities offer “a strong opportunity for prospective buyers”.
Knight Frank also highlights the Iberian Peninsula as a hotspot for luxury residential markets. Between them, Spain and Portugal accounted for a quarter of the top 20 rankings, with Ibiza and the Algarve at the top of the table.
Best performers by destination type
In 2023, the destinations with the most significant price rises were those in the sun. Knight Frank had predicted last year that so-called “sun locations” would continue to outperform.
Homes in this type of location, such as Nice, Marbella or Barbados, experienced 4.7% price growth. Property in ski resorts increased by 3.3% in value, while luxury homes in cities rose by just 2.7%.
Locations offering more luxury residential for your money
The Index also tracks how many square metres you can buy of high-end homes in different parts of the world. As you would expect, some luxury residential markets offer relatively little space compared to others.
As the graphic below shows, Monaco and Hong Kong have the most expensive square metre in the world. In these two cities, US$1 million buys you a mere 16 and 22 square metres, respectively.
(Image credit: source Knight Frank, by Dylan Gonzales from Pixabay)
When it comes to second homes, Aspen has the priciest luxury homes, and you get just 20 square metres for US$1 million. On the other hand, the same amount buys you 101 square metres of a high-end property in Marbella.
(Source: Knight Frank)
