Resurgence in Global Prime Real Estate Markets

In a recently released article, Knight Frank’s Intelligence Lab delves into the capital growth of real estate in the world’s global prime markets.

2024 has witnessed a significant revival in prime housing markets following the price retreats of 2023. With interest rates gradually decreasing, the forecast for 2025 is optimistic. Growth is expected to be led by dynamic cities such as Dubai, New York, Geneva, and Paris. However, it’s not all smooth sailing. Despite these positive trends, challenges remain. Affordability issues and rising inventory levels have caused stagnation in several key markets, with a potential decline anticipated in one or two areas.

Dubai, +5%

With a limited supply of luxury properties and a rapidly growing population, Dubai’s prime real estate market is poised for positive growth in 2025. Over the past 12 months, listings in prime neighborhoods have decreased by 52%. This shortage is even more significant in the US$10 million+ segment, where available properties have declined by 65%.

New York, +3%

After five years of sub-par growth, prime New York has regained its confidence, with a robust market expansion expected to return in 2025 – a level of growth not seen since 2019. Inventory levels are significantly below the five-year average (-54%), which will help support pricing as the selling season accelerates in the spring.

Geneva, +3%

Geneva’s 3% growth forecast underscores its enduring reputation as a safe haven for global elites. With its strong currency, low taxes, and exceptional quality of life, the city continues to attract UHNWIs. The upcoming income tax cut in 2025 in the Canton of Geneva will further enhance its allure.

Paris, +2.5%

Despite political instability, Paris is attracting growing interest from UK and US buyers, spurred by a weak euro. Following the 2024 Olympics and France’s general election, buyers are eager to proceed with plans that had been on hold for several years.

London, +2%

We anticipate a slower recovery in the short term due to the end of non-dom tax status and increased stamp duty for second homes. However, the relative value since the last peak, greater political certainty, a high presence of cash buyers, and rising global wealth suggest that price growth will strengthen over the next five years.

Sydney, +1%

Price growth is expected to further moderate in 2025. The slowdown in activity will be driven by the upcoming federal election, ongoing geopolitical uncertainty, and the unlikely reduction of interest rates until the second half of the year. However, underpinning this moderation is a buoyant stock market, tightly held properties, and a strong presence of cash buyers seeking downsized homes.

Miami, 0%

After experiencing substantial growth – an 84% rise in prices over the past five years—Miami’s prime market is expected to cool down in 2025. Annual growth slowed to 3.8% by the end of 2024, and this deceleration is likely to continue into next year. With listing volumes up 36% over the past 12 months, market power is shifting from sellers to buyers. Nevertheless, those who bought just a few years ago and are now selling will still have seen significant gains.

Hong Kong, 0%

With the relaxation of the New Capital Investment Entrant Scheme to include the residential sector, we anticipate increased activity in the residential market for properties over HK$50 million. Although mortgage rates remain relatively high compared to rental yields, the scarcity of supply and attractive pricing are likely to entice potential investors back into the market.

Singapore, 0%

Buyers are expected to gain confidence in 2025 as interest rates decline. However, the prevailing Additional Buyer’s Stamp Duty (ABSD) rates will temper this exuberance for both local and foreign homebuyers, particularly for investors not purchasing for owner-occupation. Consequently, price movement is anticipated to remain relatively flat throughout the year.