Knight Frank reports a staggering 50% surge in luxury home prices in Dubai

Dubai has solidified its position as the leading luxury real estate market, with home prices increasing by nearly 50% in the year ending June 2023. This remarkable surge marks Dubai’s eighth consecutive quarter as the top-ranked city in the sector, as reported by Knight Frank.

The latest data from the property consultancy firm reveals that prices in Dubai have jumped a staggering 225% since reaching a pandemic low in the third quarter of 2020.

Following Dubai, Tokyo secured second place with a 26.2% annual rise in luxury home prices, while Manila claimed third place with a climb of 19.9%.

Shanghai in China experienced a notable increase of 6.7%, and Singapore witnessed a rise of 4.2%. The report observed that Singapore’s rental market has been particularly affected by the influx of expatriates, mainly driven by the thriving financial and professional services sector. The discrepancy in market impact between rentals and sales is partly due to taxation policies for foreign buyers.

Foreign buyers interested in purchasing residential property in Singapore have faced a significant increase in additional stamp duty since the end of April. The rate has doubled to 60%, up from the previous 30%.

In contrast, Hong Kong experienced a 1.5% price decrease over the past year due to a surplus of unsold inventory resulting from newly developed projects. In an effort to stimulate demand, the Hong Kong government raised the mortgage loan-to-value ratio to 70% for residential properties valued at 15 million Hong Kong dollars ($1.9 million) or less. However, the impact of this change on market growth is still uncertain.

New York saw a decline of 3.9% in luxury home prices, while San Francisco recorded a significant plunge of 11.1%. Frankfurt, Germany occupied the bottom position on the list with a 15.1% drop.

The Knight Frank Prime Global Cities Index indicates that average annual prices across the 46 markets included in the index increased by 1.5%.

Liam Bailey, the Global Head of Research at Knight Frank, acknowledged that global housing markets continue to face pressure from rising interest rates. However, he emphasized that the index results affirm the presence of strong underlying demand and limited supply due to disruptions in new building projects during the pandemic, as well as the return of workers to urban areas. Bailey added that with reduced uncertainty about inflation, market price adjustments are expected to be less significant than previously anticipated.