With holiday-goers returning from their trips and school now back in full swing, the winding down of New Year celebrations brings the rest of the year into perspective. Plans for buying a home and investing in property in 2024 might be on your mind should you decide to maximise your potential investment plans. LUXUO highlights the prime areas and risks involved when investing in property for the year to come.

Goodwood Residences in Bukit Timah. Image: Goodwood Residences.

A recent Knight Frank 2024 report has revealed “cautious optimism” based on a global forecast. The findings also revealed that frontrunner Dubai is the location to invest for 2024.

While two major geopolitical crises occur, observers have noted varying approaches within the banking industry. As prices for gas and oil remain high, this has led to leaders in Canada and the UK signalling their intent to address inflationary risks. However, their political brethren in Europe and the US come at a more relaxed stance.

Kate Everett-Allen, Head of International Residential Research, Knight Frank, opines, “Amid this backdrop, the ‘higher for longer’ trend persists, leading to a notable shift in buyer behaviour. Our global research network reports that 52 percent of prime buyers now opt for cash purchases, an increase from 46 percent six months ago.”

The Economist’s report is more alarming: “Governments are grappling with mounting challenges, as public debt in the affluent world reaches historic levels relative to GDP, surpassing post-Napoleonic War figures.”

Image: Knight Frank

This inevitable consequence points to rising taxes, where policymakers will most likely focus on wealth and property. While these are the looming headwinds, Everett-Allen cites, “Overall prime price forecast for 2024 has grown from 2.1 percent to 2.5 percent since our mid-2023 global research team assessment. However, the outlook for 2023 has seen the most significant improvement. Our researchers projected a 1.7 percent average price increase at the year’s midpoint. However, this figure has surged to 2.4 percent with just a month remaining.

Image: Knight Frank

So, the silver lining on the cloud? Some prime buyers think that the worst is behind us. On the demand factor, interest rate hikes are witnessing a swan song while inflation puts on its brakes; therefore, buyers have regained their appetite in certain markets. In the supply factor, it is observed that there’s a reluctance among mortgaged households to move, buoyed by persistent labour shortages, high construction costs and planning delays; all these collectively contribute to a shortage of new stock entering the market.

Some Key Findings

Dubai is one of the top destinations for homebuyers. Image: Red Magazine.

Dubai is in the lead as Knight Frank’s price forecast for 2023 points to 14 percent growth envisaged, while Auckland (+10 percent) is the frontrunner for 2024. Cash buyers, as a proportion of all prime sales, have risen from 46 percent to 52 percent in the last six months, according to Knight Frank’s research network. Upcoming elections in some key cities have become the most considerable potential risk to prime markets in 2024, with the relaxation of tax and property regulations considered the most significant opportunity.

Looking Back

A lot has changed in some key property markets, notably Singapore, Hong Kong and New Zealand. The Little Red Dot ramped up stamp duty for non-residents, taking total purchase costs to around 60 percent; Hong Kong took the opposite approach; New Zealand’s change of government offered relaxed rules for foreign buyers. Over in the United States, Los Angeles has put in place a mansion tax while New York’s authorities opted for a de facto ban on short-term lets. Prime residential prices have stood their ground with these changes in economic uncertainty and the uneasiness of geopolitical risks. Based on Knight Frank’s 2023 rankings, Dubai takes pole position where it has anticipated annual growth of 14 percent over the entire 12 months. The other countries that follow: Madrid (6.5 percent), Stockholm (five percent), Seoul (4.5 percent), and Miami (four percent), round out the top five; each city is either rebounding from recent price declines or experiencing robust wealth migration.

Image: Knight Frank.

Therefore, investors are always looking to explore new locations and diverse property sectors based on the landscape of slower price growth, courtesy of the elevated cost of debt. While persistent inflation might throw a spanner in the works, the advent of new property cycles whets the appetites of eagle-eyed opportunistic homebuyers.

Crystal Ball

Peering into the crystal ball, Knight Frank tracked 25 cities where Auckland takes the lead for 2024, where it is anticipating a 10 percent increase in luxury prices. Dubai will snag the third position in 2024 with a projected prime price growth of five percent. Dubai witnessed a stellar post-pandemic performance-based, in fact, on the slowdown in the rate of price growth. China faced a scarcity of new prime supply and renewed demand, while India will see it remain in the positive realm; all have helped Dubai’s growth. The Emirate is pulling out all the stops to woo local and international buyers by focusing on its affluent enclaves, inland villas offering lush greenery, and more.

Christine Li, Head of Research, APAC, Knight Frank, chimes in, “Singapore is one key market to look out for as it seems to be insulated from the economic headwinds, particularly the Bukit Timah zone. The nation’s stable, business-friendly environment has made it resilient. Bukit Timah remains a prime choice for luxury living for expatriates and locals.

Madrid and Stockholm have become Europe’s best performers, all thanks to offering homebuyers good value, low purchase costs, high-quality life and no regulations or restrictions on overseas buyers.

Triptych Bankside residence in London. Image: Triptych Bankside.

Everett-Allen also sheds light on Paris, “The city of lights has a diverse mix of buyers, the euro remains relatively weak, providing some with a discount; the 2024 Paris Olympics will attract global interest; it is home to the most prominent urban transport regeneration plan in Europe (Grand Paris Express), and if approved, a Bill currently going through the French National Assembly could provide Brits with an automatic right to a long-stay visa.

Prime central London did not move its needle as it is poised for a milder correction than the broader UK market. This resilience is attributed to a higher prevalence of cash sales, particularly within Zone 1, coupled with prices currently sitting 15 percent below their previous peak.

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