As such, we anticipate a positive, albeit slightly muted, average global capital value increase of 1.6% in 2025, lower than the average growth of 2.2% recorded in 2024 across the 30 global cities we monitor. However, there is a degree of caution in this forecast as the headwinds which affected global residential markets last year have not abated.

AVERAGE PRIME RESIDENTIAL CAPITAL VALUE GROWTH

CHASING THE SUN

As has been the case in recent years, prime buyers worldwide are prioritising lifestyle when purchasing residential property. Dubai, a perennial leader for capital value appreciation, is forecast to see the strongest growth in 2025 with anticipated prime price growth of 8% to 9.9% during the year. A market with growth supported by deliveries of new supply, Dubai has seen several new projects in recent years which have rewritten the market definition of ‘prime’.

Another market anticipated to see strong growth, but driven by a lack of supply rather than new supply, is Sydney. The persistent scarcity of luxury properties is expected to limit buying opportunities, continuing to drive prices upward. Coupled with sustained demand from domestic and international buyers and a relatively weaker currency, prime residential prices are anticipated to increase between 4% and 5.9% during 2025.

Iberian locations are also forecast to see strong capital value appreciation over the course of the year, with Madrid, Barcelona, and Lisbon forecast to see prime residential price increases of between 4% to 5.9%. For Madrid and Barcelona, demand in the prime segment remains strong. A significant portion of demand in both markets comes from foreign buyers holding dollar- denominated savings, looking to take advantage of a comparatively weaker euro. Lisbon is also expected to see its positive momentum continue, supported by forecasts of further interest rate cuts. These anticipated reductions could stimulate additional buyer activity, reinforcing the current upward trajectory of the market.

Cape Town has seen strong prime residential price growth driven by a recovery in confidence, improved economic activity, and ongoing domestic and international demand. Further interest rate relief and optimism in the country’s economic prospects in 2025 are expected to underpin both sales activity and growth in prices this year.

SAVILLS WORLD CITIES PRIME RESIDENTIAL FORECASTS, 2025

TAXES AND TECH

At the other end of the capital value growth spectrum are a handful of cities which are forecast to see negative capital value growth over the course of the year. Cooling measures from governments, both proposed and implemented, in Singapore, China, and the United Kingdom have had the effect of slowing capital value growth.

In the United Kingdom, it’s likely that the abolition of ‘non- doms’ status and the additional 2% stamp duty surcharge will result in further downward pressure on prices in the short term. However, the scale of falls will be limited by where prices already sit in an historic context, cuts to the Bank of England base rate and ongoing safe haven flows of wealth, given underlying geopolitical uncertainty. As such, we are expecting prime capital values in London to fall by approximately 2% over 2025.

The recent cooling measures in Singapore, which mainly targeted foreign buyers, along with economic challenges, have taken a toll on the prime sales market and lowered transaction numbers. Given lower levels of demand, the prime residential market is expected to remain subdued. While the city-fringe and suburban areas are expected to perform well this year, demand for homes in prime areas is still expected to be lacklustre, given the lack of significant launches and ongoing cooling measures. Prices are forecast to dip for the prime locations between 0% and -1.9% for the year.

Tech hubs of Shenzhen and San Francisco are expected to see slight declines in capital values over the course of 2025, with each forecast to see falls between 0% and -1.9%. While there does appear to be signs of stabilisation and growth in global tech markets, especially around generative AI and cloud computing, residential markets in these top tech locations have not seen green shoots emerge yet.

CONFIDENCE AND SUPPLY

Across the United States, the mortgage rate movements that heavily influenced the housing market in 2024 are destined to continue to play a major role in the coming year. A late-summer dip in rates gave a second-half tailwind to this year’s home sales as buyers and sellers took advantage of lower rates and increased confidence levels. In a market dominated by the 30-year fixed-rate mortgage, movements in either direction can have outsized impacts on both prices and transactions, even in the typically less mortgage- reliant prime residential market.

Capital values are forecast to tick up 0.7% on average over the course of 2025 for the four US markets in the World Cities Index, with Miami expected to see the highest appreciation of 2.5%, followed by New York City, and Los Angeles with growth of between 0% and 1.9% forecast. Although supply is likely to remain low compared to historic levels, it is expected to improve next year. Mortgage rates are also forecast to continue to fall next year, but only moderately, leading to an additional boost to confidence.

GROWTH DRIVERS

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