Dubai Leads the World in Luxury Home Price Growth

Luxury home values increased by 1.1%, on average, across the 30 cities analyzed in the Savills World Cities Prime Residential Index during the first six months of the year, according to a report Tuesday. 

Growth picked up pace from the second half of 2022, when prices increased by 0.8%, but average capital values only rose 1.9% year over year in June, marking the slowest annual growth since December 2020, according to Savills. 

“The slowdown in sales markets, first recorded in the second half of last year, has continued into 2023 in the face of rising interest rates and muted global economic growth,” said Paul Tostevin, director of Savills World Research. “In spite of this, prime residential price growth has, on average, remained positive, and we forecast capital value growth of 1.1% for the second half of the year across the 30 global cities we monitor.” 

Asia-Pacific cities experienced the strongest luxury price growth in the first half of the year, with Dubai leading the 30 cities with an 11.2% increase in luxury home prices. Of the 13 Asia-Pacific cities included in the index, 10 saw increases in price.

Europe followed with seven of 11 cities reporting price increases.

Miami was the only U.S. city that experienced an increase in luxury home prices during the first half of the year, reporting a 1.1% increase.

Luxury prices in New York decreased by 0.7%, and though luxury sales also dropped—12% from a frenzied 2022—they outperformed 2019 sales by 27%, signaling a return to pre-pandemic levels. 

Prices fell more significantly in Los Angeles (-3%) and San Francisco (-3.7%)—which came in dead last for the index. With inventory low in these West Coast cities, many potential buyers chose to stay put, and in Los Angeles, the April implementation of the mansion tax on homes that sell for $5 million or more could also be to blame for declining prices. 

Lisbon (2%) and Singapore (0.1%), the two cities that led the Savills index last year, had more subdued price growth in the beginning of the year, but both markets are expected to pick up over the next six months, according to the report. Lisbon home purchases have been taking longer to complete, while Singapore’s luxury prices have been affected by rising land and construction costs. 

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