According to a report by Savills, 2025 is set to be a pivotal year for the global real estate sector, presenting both opportunities and challenges.
The report forecasts a 27% increase in global real estate investment turnover, reaching $952 billion, driven by factors such as lower interest rates and heightened investor confidence. By 2026, the market is expected to surpass the $1 trillion mark for the first time since 2022.
Dr. Andrew Golding, CEO of the Pam Golding Property Group, which partners exclusively with Savills for residential real estate in Africa, said that despite the economic turbulence of recent years, prime residential markets have demonstrated remarkable resilience.”
However, the report also cautions that while several markets saw improvements toward the end of 2024, global real estate remains under the influence of complex challenges, including economic uncertainty, geopolitical shifts, and changing priorities.
“Savills’ latest Global Risks Report makes the point that perhaps unsurprisingly, geopolitical risks dominate concerns for 2025.
Its Global Risks Perception Survey also shows a rising sense of urgency regarding the environment. Extreme weather events are the second highest-ranked challenge in 2025, and are anticipated to become even more pressing, achieving the top ranking in the longer-term, 10-year risk outlook.”
The report noted that the recent wildfires tragically affecting Los Angeles are only the latest example of the impact extreme weather can have on urban areas.
Real estate has a key role to play – after devastating wildfires in Australia in 2019 and 2020, for example, the country’s National Construction Code was updated to stipulate fireproof building materials, design and construction, and insists on a minimum distance between vegetation and buildings in high-risk areas.
“An improved economic backdrop is the foundation for real estate market recovery in 2025. As Savills states… while the world faces many challenges, collaboration will be key to navigating them,” said Golding.
“Davos 2025 highlighted the need for global cooperation to tackle geopolitical, environmental, and technological challenges. For real estate, this means prioritising resilience and innovation.”
According to Kelcie Sellers, associate director, Savills World Research – in their Prime Residential Outlook 2025, prime buyers globally will likely continue to prioritise lifestyle in their choice of residential property.
“Dubai, a perennial leader for capital value appreciation, is forecast to top the leaderboard in 2025 with prime price growth of 8-9.9% for the year. A market with growth, supported by a strong supply pipeline, Dubai has seen a number of projects in recent years which have rewritten the market definition of ‘prime’.
“Sydney is also expected to record strong growth, but here it will be driven by a lack of supply, rather than new supply. The persistent scarcity of luxury properties is expected to limit buying opportunities. Coupled with sustained demand from domestic and international buyers and a relatively weaker currency, prime residential prices are anticipated to increase by 4-5.9% during 2025.”
Similar levels of growth are forecast for Madrid, Barcelona and Lisbon. In the Spanish cities, a significant portion of demand comes from foreign buyers with dollar-denominated savings looking to take advantage of a comparatively weaker euro. Lisbon’s positive momentum, supported by forecasts of further interest rate cuts, should also continue.”
“Also in this projected growth bracket is Cape Town, a market where confidence has recovered, economic activity has improved, and domestic and international demand is ongoing. Further interest rate relief and optimism in South Africa’s economic prospects for 2025 should underpin sales activity and growth in prices in the new year,” said Sellers.
