London, UK – Prime prices in Dubai accelerated by 44% in 2021, sending the Emirate to the top of Knight Frank’s Prime International Residential Index 100 (PIRI 100).
According to The Wealth Report, Knight Frank’s latest research report, which analyses prime price performance in 100 cities and second-home markets worldwide:
* Moscow came in second place, with price growth of 42%. The report says Russia’s mortgage subsidy programme and tight supply helped fuel price growth, albeit temporarily.
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* The next three top positions went to San Diego (+28.3%), Miami (+28.2%) and The Hamptons (+21.3%).
Cape Town is placed at number 94 of 100 in the Knight Frank report.
Following seven years of negative price growth and with overall prices still 30% below their 2014 peak, the Emirate’s relative value came into focus in 2021.
Kate Everett-Allen, head of international residential research at Knight Frank says: “The UAE’s handling of the pandemic, strong take-up of the vaccine, the delivery of high-end turnkey projects as well as innovative new visa initiatives and economic reforms, have together boosted Dubai’s profile in the eyes of international buyers.
“The top end of the market has been particularly active – sales above US$10m (R153.9m) have historically accounted for 2% of all transactions but in 2021, they equated to 7%.”
The value of the Knight Frank Prime International Residential Index increased by 8.4% in 2021, up from just under 2% in 2020 - its highest annual increase since the index launched in 2008.
Of the 100 luxury markets tracked, only seven saw prices decline in 2021 and a staggering 35% of locations saw prices increase by 10% or more, underlining the strength of the sellers’ market during the pandemic.
Overall, the Americas were the regional top performer, accounting for six of the top 10 rankings and posting average growth of almost 13%.
Although, Asia-Pacific (+7.5%) outpaced the EMEA region (+7.2%), this was largely driven by Australasia (+12.3%). Asia alone managed a relatively modest rise of 5.5% growth.
Although sunshine resorts from Miami to the Gold Coast shone bright in 2021, with prices climbing 10.2% on average, it was cities that provided this year’s curveball.
Overlooked in 2020 as suburbs and resorts attracted those looking for space to hunker down during the pandemic, the city bounced back in 2021, averaging price growth of 8.4%. Covid-19, it would seem hasn’t triggered the ongoing flight from bustling urban centres that some were predicting.
Even ski resorts, which have in recent years posted fairly frosty results saw average price growth climb to 7.2% in 2021 – Aspen, St Moritz and Verbier were the top performers.
What’s driving demand?
· Low interest rates, the availability of cheap finance;
· A shortage of prime stock;
· Rising wages and accrued savings in lockdowns;
· Strong-performing equity markets and record bonuses;
· A reassessment of housing need and lifestyles;
· More flexible working patterns;
· Wealth creation – 5 million new millionaires in 2021 globally;
· Growth of co-primary living, heightened demand for second homes;
· The appeal of property as an inflation hedge
Analysing the future of prime price growth in 2022, Liam Bailey, global head of research at Knight Frank said: “Far from running out steam, this year we will see the luxury housing boom endure. Dubai, Miami and Zurich lead our 2022 forecast, with prime prices expected to end the year between 10% and 12% higher.
“Asian cities are expected to trail slightly, but even here, prices will grow. Key themes to watch: Agents will complain about stock shortages, buyers will complain about rising taxes and cooling measures, and city markets will be back in demand.”
Knight Frank’s Prime International Residential Index (PIRI 100)
Luxury residential market performance, annual price change December 2020 to December 2021
1. Dubai - 44.4
2 Moscow - 42.4
3 San Diego - 28.3
4 Miami - 28.2
5 The Hamptons - 21.3
6 Seoul - 21.0
7 Toronto 20.3
8 Taipei 18.9
9 San Francisco 18.6
10 Los Angeles 18.5
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