The Prime International Residential Index (PIRI 100), which tracks the performance of 100 city, sun and ski locations globally, surprised on the upside in 2023, says Kate Everett-Allen at Knight Frank.
Of the 100 markets tracked, 80 recorded flat or positive annual price growth.
Yet at the start of 2023, economists were expecting a much weaker outcome, said Everett-Allen. "Stock markets were headed for more pain, inflation was veering out of control and the pandemic-fuelled property boom was set to end in tears as borrowing costs hit 15-year highs in some markets. Right? Wrong."
The “soft landing” adage applied as much to luxury property markets as to monetary policy, with the index posting a solid 3.1% gain overall.
Manila (26%) leads but last year’s frontrunner, Dubai (16%), slipped only one spot. Asia-Pacific (3.8%) pipped the Americas (3.6%) to the title of strongest-performing world region, with Europe, the Middle East and Africa trailing (2.6%).
Sun locations continued to outperform, up 4.7% on average with ski resorts close behind (3.3%) and cities on 2.7%, said Knight Frank.
As markets adjusted to the higher cost of debt, sales took a bigger hit than prices. In London, New York, Dubai, Singapore, Hong Kong and Sydney, luxury sales declined on average by 37% year-on-year.
Some markets corrected after strong falls due to rapid rate hikes (Auckland, Seoul), while others moved up the rankings in part due to supply shortages (Sydney, Singapore).
Some were influenced by policy and tax shifts, easing (Hong Kong) or tightening (Los Angeles), and some markets benefited from significant wealth inflows (Dubai, Miami).
Knight Frank's PIRI pricing graphics provide an annual guide to how much space your money will buy you when it comes to prime residential property.
Cape Town is one of several value-for-money places in sun and sea belts that rose to the top of Knight Frank’s Prime international residential index last year.
The city’s housing market now ranks as the world’s fourth-best performer, alongside the Algarve in Portugal. Both notched up impressive price growth of 12.3% last year.
Cape Town has emerged as a hotspot for affluent local and international property investors.
Semigration
Affluent South Africans are bidding farewell to Gauteng in favour of the Western Cape due to subpar service delivery in Johannesburg and Pretoria, according to the annual Africa Wealth Report by Henley & Partners.
Despite being Africa's wealthiest city with thousands of millionaires, Johannesburg has seen a significant decline in its millionaire population over the past decade, losing approximately 44%.
This exodus has particularly benefited Cape Town, which has experienced a 20% increase in millionaire residents and is projected to surpass Johannesburg as Africa's wealthiest city by 2030.
The Western Cape, including areas like the Cape Winelands, Garden Route, and Whale Coast, has witnessed a surge in millionaire residents, with projections indicating further growth in the coming years.
Smaller towns, particularly those in the Cape Winelands area, are expected to see a rise in the number of millionaires over the next decade.
In the past 10 years, the Winelands region saw a 28% increase in the number of millionaires residing there, and this trend is expected to accelerate in the 2030s.
The millionaire population in the Garden Route and the Whale Coast also grew by 32% and 35%, respectively, during the previous decade.
This migration trend is attributed to concerns over safety, service delivery, and political stability. Consequently, property markets in Cape Town and surrounding areas have boomed, attracting both local and foreign buyers.
Dr. Andrew Golding, CEO of Pam Golding, highlights Cape Town's appeal, noted its value for money in the property market compared to other global cities like New York and London.
Additionally, South Africa's lifestyle offerings are considered among the best globally, further driving investment and migration to the region.
Western Cape house prices climbed 9.4% year on year in the first quarter of 2024, according to Rhys Dyer, CEO of the ooba Group, who said that almost 60% of the value of applications processed by ooba in the first quarter were from homebuyers who had a monthly income exceeding R83,300.
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