Milan and Rome in the top 30 luxury residential markets

Prices for luxury residential in the world's largest cities will continue to rise in 2024. This is according to data from the Savills World Cities Prime Residential Index, according to which prime property prices in the 30 cities monitored are expected to grow on average by 0.6 per cent over the next 12 months, down from +2.2 per cent in 2023. Looking at prices, Milan and Rome are ranked 13th and 17th respectively in the top 30 luxury residential markets globally, and 4th and 5th in Europe.

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Among the 30 cities monitored by Savills, 17 will see price growth that is milder than that recorded in 2023, while the remaining 13 cities will see equal or slightly higher increases; markets that experienced substantial growth in the post-pandemic months are slowing down towards levels closer to pre-pandemic values.

"In the face of continued economic uncertainty, prime residential markets saw little change in 2023 after two years of significant growth. Growth is expected to slow further in 2024, when markets will return to more normal conditions, but will remain in positive territory," said Kelcie Sellers, associate at Savills World Research. "We expect 2024 to be an interesting year in the residential market landscape globally. Countries representing about 40 per cent of the world's population will go to the polls this year, and housing-related issues are likely to be the focus of many voters and politicians. Potential interest rate cuts by central banks in mid to late 2024 will support the luxury residential market, which could surprise with a further rise in prices in the latter part of the year".

Milan and Rome among the most popular cities for luxury homes

Milan and Rome are respectively ranked 13th and 17th in the top 30 luxury residential markets globally, and 4th and 5th in Europe. The strong demand and international appeal of the two Italian cities is confirmed both by the growth recorded in 2023 and, above all, by the positive forecasts for 2024.

Rome's market has proven to be extremely resilient thanks to a strong demand for quality products and new developments: the demand for valuable assets with unique characteristics remains high and will remain strong in 2024. In the Milan market, the discrepancy between supply and demand for prime products and new developments supports the still growing prices, albeit more slightly; the new product being developed increases the quality of supply in the market but, at the same time, contributes to the price growth.

"Despite concerns about rising interest rates and the resulting increased price sensitivity, buyers with greater financial means continue to purchase properties in the prime segment in Italy. And, in this direction, there has also been a surge in the luxury rental market. Milan and Rome remain the main Italian cities to attract capital on a global level, thanks to their livability, lifestyle and also the lower purchase cost compared to the most important world capitals,' commented Danilo Orlando, Head of Residential at Savills in Italy.

Sydney and Dubai, soaring luxury prices in 2024

Sydney and Dubai will be the two best performing cities in 2024; both cities will benefit from an increase in the population with substantial assets, the so-called High Net Worth Individuals (HNWI). In Sydney, demand for high-end homes remains high, pitted against insufficient supply. This imbalance will continue in 2024 with a consequent upward effect on prices, which will increase by 8-9.9 per cent.

Dubai has experienced a significant price increase (+17.4%) over the past year but growth is likely to slow in 2024 due to a greater supply-demand imbalance. We expect a price change in the 4%-5.9% range.

In general, markets with relatively lower prices than other cities will perform better over the next year. Cape Town, Barcelona, Madrid and Kuala Lumpur boast prices per square foot below 8,000 USD (corresponding to EUR 7,940 per m2) and represent the four markets with the highest expected growth.

Due to the weakening sentiment, rising interest rates and the difficult economic environment, we expect that in established residential markets such as Los Angeles, New York, San Francisco, Seoul, London, Singapore and Hong Kong, prices will decline in 2024.

"Economists, policymakers and practitioners broadly agree on the outlook for next year. Inflationary pressures will gradually subside, leaving 'easy' gains in the past and necessitating 'higher, longer' interest rates. The probability of a prolonged period of weak growth globally is high. This is the basis of the so-called 'soft landing' narrative that dominates the general consensus," continued Kelcie Sellers, associate at Savills World Research. "Although the prime residential market is less affected by credit access difficulties than the residential market as a whole, the weakening macroeconomic environment will affect sentiment, and many potential buyers and sellers will adopt a 'wait-and-see' approach in a higher interest rate environment".

The Chinese locations of Guangzhou, Hangzhou and Shenzhen are also expected to see price declines in 2024, due to the volatility of the property market and restrictive government policies that will seek to stabilise the market.

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