Population Growth and High-net-worth individual (HNWIs) Drive Demand for Luxury Housing
Despite recent economic uncertainties, prime residential markets have shown remarkable resilience. As 2025 begins, new government policies—ranging from tax reforms to international affairs—are expected to impact high-end real estate, according to global consultancy Savills.
“We anticipate a moderate global capital value increase of 1.6% in 2025, compared to 2.2% in 2024 across 30 global cities we monitor,” Savills reported.
Dubai’s Market Strength
Dubai, a leader in capital value appreciation, is forecast to see the strongest growth in 2025, with prime property prices expected to rise by 8% to 9.9%.
The market’s growth is driven by:
A growing population and continued influx of high-net-worth individuals (HNWIs).
New luxury developments redefining the ‘prime’ real estate sector.
Strong rental demand, with projected rental price growth exceeding 10%, following a 23.5% rise in 2024.
Sydney’s prime residential market is set for strong growth in 2025, driven by limited supply rather than new developments. The scarcity of luxury properties is restricting buying opportunities, fueling continued price increases. Demand from domestic and international buyers, combined with a weaker currency, is expected to push prime prices up by 4% to 5.9%.
In Iberia, prime residential markets in Madrid, Barcelona, and Lisbon are also forecasted to see capital value appreciation of 4% to 5.9%. In Madrid and Barcelona, demand remains strong, largely fueled by foreign buyers with dollar-denominated savings, taking advantage of the weaker euro. Lisbon’s market is expected to maintain its momentum, supported by anticipated interest rate cuts, which could further stimulate buyer activity and sustain the upward price trend.
Cape Town has also experienced robust prime residential growth, driven by economic recovery, increased confidence, and sustained local and international demand. Optimism in South Africa’s economic prospects, along with expected interest rate relief, is likely to support further price appreciation and sales activity in 2025.
These markets reflect global demand for prime real estate, influenced by currency dynamics, economic policies, and supply constraints, shaping trends into 2025.
Market Challenges Elsewhere
While Dubai leads in prime real estate growth, some global cities face declining capital values.
Singapore, China, and the UK are expected to experience negative growth due to government cooling measures aimed at stabilizing property markets.
With demand outpacing supply in Dubai’s most sought-after communities, the emirate is poised to maintain its position as the world’s top-performing prime residential market in 2025.
