Singapore, Dubai to lead price growth in prime residential markets amid slowdown worldwide

SINGAPORE and Dubai will lead prime residential markets globally in 2023, with capital values in the two wealth magnet cities projected to grow 6 to 7.9 per cent, said Savills on Tuesday (Feb 7). 

But it noted that both markets are not immune to higher interest rates and wider economic headwinds. 

Singapore’s forecast prime price growth is flattish, compared to its prime residential capital value growth of 6.8 per cent last year. In December 2022, the average prime capital value in the Republic is US$1,780 per square feet (psf). 

“Moving into 2023, Singapore’s prime residential market is facing a situation where there are few new launches. With the reopening of borders in China to outbound travel, the potential for this segment of the private residential market to outperform the others is very high,” said Alan Cheong, executive director of research and consultancy at Savills Singapore. 

Dubai’s forecast prime price growth is muted compared with its 12.4 per cent capital value growth in 2022. Its average prime capital value in December 2022 was US$730 psf. 

Across the world, many prime residential markets are set for a slowdown in 2023, with average price growth of 0.5 per cent forecast for the 30 global cities monitored by Savills in its prime residential world cities index. 

“Recessionary conditions, a higher interest rate environment and inflation will weigh on prime residential performance although the second half of the year holds some potential for global economic growth,” said Paul Tostevin, head of Savills World Research. 

Of the 30 global cities monitored by Savills, 17 will record slower growth than in 2022, with several posting declines, while the remaining 13 are forecast to record equal or slightly enhanced growth this year. 

Cities expected to see low to modest levels of capital value growth in 2023 include Lisbon, Athens, Rome, Milan, Barcelona and Madrid, where prime property is coveted as a safe-haven asset and inflation hedge in times of economic turmoil. Milan, southern Europe’s top performer in 2022 with capital value growth of 5.7 per cent, expects to post price growth of between 4 and 5.9 per cent this year. 

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Among the regions tracked by Savills, prime prices are forecast to take a dive in nine cities, and Hong Kong is expected to fare the worst.

In Hong Kong, prime prices fell by -8.5 per cent in 2022 and global macro conditions are set to further impact the market with expected price falls of between -7.9 and -6 per cent. But Savills noted the city remains the world’s most expensive prime residential market at US$4,070 psf. 

In the wider Asia region, Seoul and Tokyo were stronger-performing cities last year, with prime prices rising 4.9 per cent and 4.1 per cent, respectively. But growth is mixed across major Chinese cities as the region’s annual growth in 2022 ranged from 3 to -2 per cent. As Covid-19 restrictions eased towards the later half of the year, Hangzhou and Shanghai saw improved performance of 1.8 per cent and 2 per cent, respectively. 

Although nationally low prime property volumes, an indebted real estate sector, weak consumer confidence and slower economic growth have placed downward pressure on price growth in China compared to previous years, Savills forecasts growth of up to 3.9 per cent in Hangzhou, Guangzhou, Beijing, Shanghai and Shenzhen this year.