Prime real estate values remained impressively steady in 2023 despite multiple interest rate rises, according to the acclaimed Wealth Report by Knight Frank. Optimal yearly increase or stability was observed in 80 out of 100 regions tracked by the Prime International Residential Index (PIRI), which follows 100 important locations throughout the world.
Enoch Khoo, managing director of Knight Frank Property Hub Malaysia, commented, “Market conditions have significantly improved compared to a year ago. Inflation remains largely under control, and it’s a matter of when, not if, interest rates will be reduced. Our labour markets are robust, and forced sellers are notably scarce. Moreover, constrained housebuilding has mitigated price fluctuations, while pandemic savings continue to bolster economies in certain advanced nations. Asia-Pacific played a noteworthy role, contributing to the region’s overall growth rate of 3.8%, this underscores Malaysia’s position as a potential key player in the luxury real estate sector.”
The Leading Real Estate Powerhouse in the Asia-Pacific Region
With a 3.8% share, the Asia-Pacific area quickly became a powerhouse. According to Khoo, this performance proves that Malaysia can establish itself as a major player in the luxury real estate sector.
Roles on a Global Scale and Domestic Results
Knight Frank Malaysia’s Associate Director Dominick Heaton–Watson reported a 3.1% increase in luxury pricing on average in 2023, indicating strong growth in the market. He said, “Luxury prices climbed 3.1% on average in 2023 – a solid gain overall. Asia-Pacific (3.8%) pipped the Americas (3.6%) to the title of the strongest-performing world region, with Europe, the Middle East and Africa trailing (2.6%). Manila (26.3%) leads the rankings, followed by Dubai (15.9%) in terms of global rankings.”
Traces of Sunlight Cover Alpine and Urban Marketplaces
Sun sites have been and will continue to be the most successful with an average growth rate of 4.7%. Ski resorts increased by 3.3% and key urban markets by 2.7%.
Minimal Effects in Comparison to Anticipated Landing
“At the start of 2023, economists were expecting a much weaker outcome across global residential property markets. Stock markets were heading 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. However, that never happened – we’ve seen a much softer landing in terms of price performance around the world,” remarked Kate Everett–Allen of Knight Frank’s International Residential and Country Research. Nevertheless, an unforeseen result materialised. Overall, there was a more consistent decline in pricing performance.
Sales volumes were significantly affected by adjustments to growing borrowing rates, even while pricing stayed the same. Sales of high-end real estate in major cities fell by an average of 37% year-over-year. London, Dubai, New York, Singapore, Sydney, and Hong Kong are just a few instances of such cities.
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There is a constant demand-supply gap in an ever-changing policy landscape.
In terms of the future of the Asia-Pacific area, “New Zealand has reinstated mortgage interest deductions for rental income and reduced the holding period to two years for capital gains tax exemptions. By contrast, Australia has tripled fees for foreigners buying existing houses and doubled taxes for vacant dwellings owned by non-residents to curb foreign speculation and address housing affordability concerns.” says Kevin Coppel, Managing Director of Knight Frank Asia-Pacific. Changes in market regulation and policy, however, may impact consumer choices.
According to Knight Frank Asia-Pacific’s Christine Li, “The Asia growth story continues to underpin price growth momentum in key markets benefitting from safe haven status such as Singapore, or the outsourcing boom in Philippines and India. As a result, there remains a persistent imbalance between demand and supply in the high-end residential sector, especially fuelled by the rising affluent demographic.”
Knight Frank’s PIRI 100: A Global Perspective on Real Estate Trends
This unique analysis shows that in 2023, the luxury property market in Manila had the greatest performance internationally, with an amazing annual growth rate of 26.3%.
The Region That Your Million Dollars Will Reach
The study also offers a fascinating viewpoint on the amount of space that can be bought in different excellent locations for one million dollars. For the same budget, Dubai provides four times the space as Hong Kong.
Possible Political Uncertainty in 2024
According to Dominic Heaton-Watson, “As almost 70 countries go to the polls in 2024, the implications for wealth flows and property markets could be significant. Politics is likely to upstage economics as the downside risk for real estate in 2024.”
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