Across all world cities, prime gross yields moved out by 10 basis points in 2023 to 3.1% as global rental markets recorded stronger growth than the sales markets.

Yields moved out fastest in Lisbon, to 2.6% (+70 bps), driven by an acute shortage of ultra-prime rental properties, and Berlin, to 3.3% (+50 bps), where more would-be purchasers in the city are choosing to rent and competing for a limited amount of stock.

The gateway US cities of New York and Los Angeles remain high yielding by global standards, with diverse economic bases they benefit from deep pools of rental demand, though market conditions have weakened. Gross yields stand at 5.1% (+25 bps) and 5.0% (+35 bps) respectively, as sales markets have slowed faster than rental markets.

Dubai stands out as another high-yielding city by world city standards, with returns of 4.8%. Prime yields here have moved in by 40 bps in the last year, during a period in which capital values rose by 17.4% and rents by 8.9%. We can expect to see yields move in further in Dubai this year as capital values growth is forecast to continue to outpace rent rises.

Prime yields average just 2.8% across Asia Pacific world cities, unchanged in the last year. This is a region where home ownership is especially coveted as a store of wealth, a trend that has fuelled capital value growth and kept yields low over the last two decades. Yields in Singapore saw the greatest increase in the region in 2023, moving out by 30 bps to 3.3%. Here, too, we are likely to see a decline in returns in 2024 as rental markets are forecast to soften amidst increasing completions of new housing supply, coupled with weaker international demand.

_{Read the other articles within Savills Prime Residential Index: World Cities below}