Singapore ties with Dubai as top cities to get highest prime capital value growth in 2023

Savills Research forecasts that Singapore and Dubai will lead the global price charts in 2023, both with projected prime price growth of between 6% to 7.9%. Both cities will continue to see sustained inflows of high-net-worth individuals; however, they are not immune to higher interest rates and wider economic headwinds.

Singapore’s forecast prime price growth of between 6% to 7.9% is similar to 2022’s 6.8% capital value growth. Conversely, Dubai’s forecast prime price growth (between 6% to 7.9%) is rather muted compared with its 12.4% capital value growth in 2022. Similarly, Miami’s predicted prime capital value growth of between 4% to 5.9% is a significant downgrade from the 25.4% growth it recorded last year, driven by a lack of supply at the top end of the market.

Overall, many of the prime residential world city markets are set for a slowdown in 2023 with an average price growth of 0.5% forecast across the 30 global cities monitored by Savills in the Prime Residential World Cities Index. (Please see Table 1)

“Recessionary conditions, a higher interest rate environment and inflation will weigh on prime residential performance although the second half of the year holds some potential for global economic growth,” said Paul Tostevin, Head of Savills World Research.

“The forecast growth of 0.5% is some way down from the 3.2% we saw last year; however, the rarefied nature of prime residential coupled with a lack of stock, will prevent a sharper slowdown,” Tostevin adds.

Of the 30 major global cities in the Savills World Cities Prime Residential Index, 17 will record slower growth than in 2022, with several posting declines. However, 13 out of the 30 are forecast to record equal or even slightly enhanced growth in 2023.,

Cities with low to modest levels of capital value growth in 2023
Low to modest levels of capital value growth are forecast in the southern European cities of Lisbon, Athens, Rome, Milan, Barcelona and Madrid, where prime property is particularly coveted as a safe haven asset and inflation hedge in times of economic turmoil.

With capital value growth of 5.7%, Milan was southern Europe’s top performer in 2022 and it is expected to cement its position this year, with a price growth of between 4% to 5.9%.

Some cities felt global economic turbulence more than others, particularly in the second half of 2022. Rising interest rates hit Sydney particularly hard and Hong Kong’s lingering pandemic-related restrictions continued to hamper its prime residential markets.

Prime prices in Hong Kong fell by -8.5% in 2022 and global macro conditions are set to have further impact on the market with expected price falls of between -7.9% to -6%. However, the city will remain the world’s most expensive prime residential market at $4,070 per square foot.

Asia-Pacific Cities
Seoul and Tokyo were the two stronger performing cities in the Asia Pacific region last year, with prime prices rising 4.9% and 4.1% respectively.

With annual growth in 2022 ranging from +3% to -2%, the picture is mixed across major Chinese cities. The easing of Covid-19 restrictions towards the latter half of the year saw improved performance in the second half of 2022 in Hangzhou (1.8%) and Shanghai (2.0%).

However, nationally low prime property volumes, the indebted real estate sector, weak consumer confidence and slower economic growth have all put downward pressure on price growth compared to previous years. Nevertheless, growth of up to 3.9% is forecast in the five mainland Chinese cities in the Savills index.

Please see Table 1

Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore says, “Moving into 2023, Singapore’s prime residential market is facing a situation where there are few new launches. With the reopening of borders in China to outbound travel, the potential for this segment of the private residential market to outperform the others is very high.”

Marcus Loo, Chief Executive Officer of Savills Singapore adds, “Many ultra-high net worth individuals have a positive view of Singapore. Given that real estate is another asset class in their portfolio, this positive perception bodes well for our prime residential market.”

About Savills
Savills is a leading global real estate service provider listed on the London Stock Exchange. The company, established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows and now has over 700 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.