Dubai tops global luxury home price index

Dubai maintained its top position in an index of prime global cities for recording the world’s highest growth in luxury property prices for the eighth consecutive quarter.

Prices of luxury homes in Dubai surged by 48.8 per cent in the 12 months to June of this year, Knight Frank noted in its report ‘Prime Global Cities Index Q2 2023.’ Since reaching a pandemic low in Q3 2020, luxury home prices in Dubai have soared by 225 per cent, it added.

Globally, average annual prices rose 1.5 per cent across the 46 markets covered by the index in the 12-month period to June. The result marked an improvement on the prior quarter with 57 per cent of cities seeing prices rise over the quarter.

The Prime Global Cities Index is a valuation-based index tracking the movement of prime residential prices across cities worldwide. The index tracks nominal prices in local currency.

By recording a price growth of 26.2 per cent and 19.9 per cent, Tokyo and Manila secured the second and third spots respectively. Miami, Shanghai, Mumbai, Madrid, Nairobi, Lisbon and Bangkok were other cities in the top 10.

Mumbai recorded the sixth highest YoY growth in prices in Q2 2023. Incidentally, the city is forecasted to record the highest annual price at 5.0 per cent on the Prime Global Cities Index for the year 2024. In Q2 2023, prime residential prices in Mumbai grew at 5.2 per cent YoY. With an increase of 3.6 per cent YoY in Q2 2023, Bengaluru ranked 20th and New Delhi positioned itself at 26th with an increase of 0.2 per cent YoY.

“Global housing markets are still under pressure from the shift to higher interest rates – but the latest results from the Knight Frank Prime Global Cities Index confirm that prices are being supported by: strong underlying demand, weak supply following disruption to new-build projects during the pandemic, and an on-going return of workers to cities. As uncertainty over the direction of inflation appears to have reduced in recent months – price adjustments in many markets are likely to be less pronounced than was expected even three months ago.” Liam Bailey, Knight Frank’s global head of research, said.

According to Knight Frank, 14 cities saw prices fall in the second quarter. Wellington was in the last spot on the ranking after a 15.1 per cent drop in prices, the figures showed. Frankfurt, where prices were down 12.9 per cent, and San Francisco, with an 11.1 per cent drop, were also in the bottom three.

Other major cities that saw annual price declines in the third quarter include London (down 0.5 per cent), Hong Kong (down 1.5 per cent) Los Angeles (3.9 per cent) and New York (down 4.5 per cent).

Knight Frank has cited Mumbai and Auckland to lead the highest change in prime residential prices in 2024. Both the cities are forecasted to experience an increase in prime residential prices by 5.0 per cent in 2024. Improving GDP figures, the city’s relative value and investment in infrastructure will be the prime influencers in pushing prices higher for the luxury housing market of Mumbai. The average price for 26-global prime residential markets is expected to grow at 2.0 per cent in 2024.

“Against the backdrop of sluggish global growth and worries about inflation that defined a significant portion of 2023, the Indian economy stood out as a remarkable achiever. While central banks in major developed economies around the world were announcing unprecedented policy rate hikes, the Indian economy, demonstrating stronger growth momentum and better control over inflation, managed to maintain stability in its policy interest rates over last two quarters,” said Shishir Baijal, CMD, Knight Frank India.