MAIN IMAGE: Nick Gaertner, director and COO of Knight Frank South Africa
Knight Frank
According to The Wealth Report, Knight Frank’s flagship research report – prime residential prices surprised on the upside in 2023. Of the 100 markets tracked in Knight Frank’s Prime International Residential Index (PIRI), 80 recorded flat or positive annual price growth.
Luxury prices climbed 3.1% on average in 2023 – a solid gain overall. Manila (26%) leads the rankings but Dubai (16%), last year’s frontrunner only slipped one spot. The Bahamas (15%) comes in third place, with the Algarve and Cape Town (both 12.3%) completing the top five.
Asia-Pacific (3.8%) pipped the Americas (3.6%) to the title of the strongest-performing world region, with Europe, the Middle East and Africa trailing (2.6%). Sun locations continue to outperform city and ski markets, up 4.7% on average. Ski resorts are close behind (3.3%), and prime prices in the city market tracked have risen 2.7% on average.
Nick Gaertner, director and COO of Knight Frank South Africa, said, “Along with rising prices, we have also seen an increase in the number of properties that have traded in the prime market. The favourable currency for foreigners and unmatched value for money lifestyle continues to attract local and international buyers to Cape Town. With the city being well managed relative to the rest of South Africa, together with its prime location regarding its proximity to some of the world’s best known winelands, mountain trails and Blue Flag beaches, the influx of buyers and resulting upward price shift is expected to continue for the foreseeable future”.
Kate Everett-Allen, head of international residential and country research at Knight Frank, shared, “At the start of 2023, economists were expecting a much weaker outcome across global residential property markets. Stock markets were heading for more pain, inflation was veering out of control, and the pandemic-fuelled property boom was set to end in tears as borrowing costs hit 15-year highs in some markets. However, that never happened – we’ve seen a much softer landing in terms of price performance worldwide.”
As markets adjusted to the higher cost of debt, sales took a bigger hit than prices. In London, New York, Dubai, Singapore, Hong Kong and Sydney, luxury sales declined by 37% year-on-year on average. Some markets corrected after strong falls due to rapid rate hikes (Auckland, Seoul), while others moved up the rankings partly due to supply shortages (Sydney, Singapore). Some were influenced by policy and tax shifts, easing (Hong Kong), or tightening (Los Angeles), and some markets benefited from significant wealth inflows (Dubai, Miami).
New York and London prices dipped around 2% in 2023 and sit 8% and 17% below their most recent peaks, respectively, presenting a strong opportunity for prospective buyers. Iberia proved a hotspot, occupying five of the top 20 rankings, with the Algarve (12.3%) and Ibiza (12%) leading the pack.
Liam Bailey, global head of research at Knight Frank, finds, “As wealth portfolios recovered in 2023, affluent buyers targeted residential property in the world’s luxury markets. While 24% of global UHNWIs were active in the market, inventory was down by almost a third, adding upward pressure to prices.”
Knight Frank’s Prime International Residential Index (PIRI 100)
| Annual change in luxury residential prices in 2023: Global top 10 No. | Location | Annual % change |
| 1 | Manila | 26.3 |
| 2 | Dubai | 15.9 |
| 3 | The Bahamas | 15.0 |
| =4 | Algarve | 12.3 |
| =4 | Cape Town | 12.3 |
| =6 | Athens | 12.0 |
| =6 | Ibiza | 12.0 |
| 8 | Mumbai | 10.0 |
| 9 | Shanghai | 8.6 |
| 10 | Mustique | 8.0 |
On an annual basis, Knight Frank provides a guide to how much space you can buy for US$1 million. There is a significant variation in prime prices across luxury residential markets. Prime prices in Dubai may sit 134% higher than at the pandemic’s start but are still noticeably lower than in more established markets. Here, US$1 million buys 91 sq m, four times the equivalent in Hong Kong.
Read the full report here
