In the most recent World Economic Outlook, the IMF headlined their global economic forecast with the phrase ‘resilience amid divergence’ as global GDP continues to defy expectations. The resilience in the global economy is also playing out in the prime residential markets – capital value growth across the 30 markets remained positive in the first half of 2024, growing by an average of 0.8% and reflecting a level of relative confidence in the asset class.

This growth is a surprise to the upside as it has exceeded the forecast from December 2023 which predicted growth of 0.6% for all of 2024. However, wider levels of caution remain among buyers as they await clarity on interest rates.

Across the 30 index locations, 60% of the cities tracked reported positive capital value growth. While seven cities reported price falls of less than -1%, the strong fundamentals of these local prime residential markets may support the possibility for capital value appreciation in the second half of the year for these locations.

Year-to-date, European and Middle Eastern cities have seen the strongest capital value growth. For many European locations, under-supplied markets are driving prime residential price increases as there is insufficient supply of high-calibre properties to meet increasing demands from the global base of buyers.

Cities in Southern Europe and the Middle East have seen the strongest capital value growth over the first six months of 2024

Kelcie Sellers, Associate Director, World Research

Cities in Southern Europe and the Middle East have seen the strongest capital value growth over the first six months of 2024; Lisbon leads with a rise of 4.2% for the first half of the year. Amsterdam, Madrid, and Athens have each seen capital value increases above 3% and Dubai rounds out the top five with growth of 2.9% for the first six months of the year.

Across the EMEA region, only two of the 13 markets saw negative capital value growth for the first half of the year. Berlin and London have seen slight price falls of -0.8% and -0.1% respectively. In Berlin, an increase in the supply of luxury properties in some districts without a corresponding rise in demand has led to downward pressure on prices. Though prices have fallen marginally in London, demand from domestic and other international purchasers continues to be resilient, especially given the growing stability in the mortgage market.

In many locations across Europe, particularly Southern Europe, American buyers have become a key prospective buyer base in prime residential markets. A comparatively strong dollar and a growing interest in European lifestyles is bringing increasing numbers of Americans into these prime residential markets.

Article written by Savills