Savills Prime Index: World Cities
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World Research – February 2020
S P OT L I G H T
Savills Prime Index:
Savills Research
World Cities
Prime residential prices Rental values and yields Capital growth forecasts
Prime residential values
Whether it’s an apartment
overlooking New York’s
Central Park, or a pied à
terre in the heart of Paris,
property in the world’s
leading cities remains highly
attractive to buyers and
investors alike. By tracking
the performance of 28 cities
from San Francisco to
Sydney, the Savills Prime
Index: World Cities
showcases the leading cities
for prime residential
property, and can help to
inform buying decisions.
We open the report with
our prime residential values
table and shine a light on
markets that are going
through various phases Prime
residential values
of growth.
Throughout the report,
we compare both capital
value growth and rental
value growth, as we see From Paris to Cape Town and Shanghai to Madrid,
rental values outperform we profile markets shaping our latest prime values
capital values for the first
time in a decade. We break
this down city-by-city
to see the changes in
values across the globe.
In 2019, Berlin’s prime
property market performed
strongest for capital
growth, while US cities
dominated the rental
markets. Moving in to 2020,
uncertainty will continue 1. Hong Kong is 2. Paris has 3. Chinese cities
to have an impact globally, still number
Shenzhenone overseas appealParis see strongest
Paris Shenzhen HK
Shenzhen Paris Cape Town
Paris Shenzhen HK HKMadrid HK Paris
but we expect to see Land-scarce Hong Kong Paris is the third highest long-term growth
a slight rebound with remains in a league of its ranked European city Cities in China have seen
a predicted average global own for prime property and eighth overall with some of the strongest long-
capital value growth of values. Despite experiencing prices 17% below London. term growth out of the cities
1.8%. Will our 2019 a price fall in 2019, values Compared with Geneva or in the index. Driven by rising
remain 84% higher than London, Paris remains a middle-class wealth and
frontrunners continue to
second ranked New York. predominantly domestic urbanisation, prime values
lead the pack in 2020?
The city’s market has market, but international in Shenzhen and Beijing
Find out more in our report.
historically been driven interest is growing. The increased 270% and 236%
by its appeal as a world- city’s residential market respectively over the past
class city, a gateway to is benefiting from an 10 years. Shanghai is the
mainland China, rising alignment of factors that highest-valued Chinese
middle-class wealth and has boosted its international city in the index, in sixth
lack of developable land. appeal. Domestic reforms place. Here, values have
under President Macron, low increased 81% during the
Jelena Cvjetkovic
Director, interest rates and a stable past 10 years to stand at
Global Residential economy are some of these US$1,760 per sq ft.
+44 (0)20 7016 3754 factors fuelling growth.
jcvjetkovic@savills.com
savills.com/research 2
Prime residential values
Prime residential values The world’s leading cities for prime residential property
US$4,610
€44,700
Prime values
US$ per square foot
€ per square metre
US$2,510
€24,300
US$2,160
€21,000
US$1,920
US$1,930
€18,500
€18,700
US$1,760
US$1,670
€17,000
US$1,590
US$1,580
US$1,550
€16,100
€15,400
US$1,480
US$1,480
€15,300
US$1,440
€15,100
US$1,370
€14,300
€14,300
€13,900
US$1,290
US$1,280
€13,200
US$1,170
€12,500
€12,400
€11,300
US$990
US$980
€9,600
€9,500
US$960
US$930
US$920
€9,300
€8,900
€8,900
US$880
€8,600
US$720
€7,000
US$650
€6,200
US$580
€5,600
US$280
US$310
€3,000
€2,700
Los Angeles
Berlin
Madrid
Barcelona
Dubai
Hong Kong
Paris
San Francisco
Mumbai
Moscow
Guangzhou
Hangzhou
Miami
Amsterdam
Lisbon
Bangkok
Cape Town
Kuala Lumpur
New York
Tokyo
Geneva
London
Shanghai
Sydney
Singapore
Seoul
Beijing
Shenzhen
Note Values to December 2019 Source Savills Research
4. Cape Town and 5. Spanish cities LONDON
6. London reaches
Kuala Lumpur
Cape TownCape Town
Cape Town are
HK the see turnaround
Madrid Madrid Madrid turning
Cape Town point The London market
Madrid
cheapest cities
Prime property in Cape
Spanish cities offer value Values in prime London have
in both a European and been falling since 2014 and
appears to be at a turning
Town and Kuala Lumpur global context, with prime now stand at US$1,920 per point as more certainty
currently costs US$310 residential property valued sq ft, just lower than Geneva returns to the market
and US$280 per sq ft at US$720 and US$650 and nearly 25% cheaper
respectively. Both markets per sq ft in Madrid and than New York. The market
have comparatively lower Barcelona respectively. appears to be at a turning
levels of domestic wealth, Spain was one of the point as more certainty
while longstanding cooling worst-hit European returns to the market as
measures in Kuala Lumpur countries during the Global a consequence of political
and a weak South African Financial Crisis and the stability and prices look
economy have also kept national economy and good value both in a
values below other cities. housing market was slow to historical and global context.
recover, with a turnaround
only beginning in 2014.
Methodology Prices for each city are based on a sample of properties. Where appropriate, we have adjusted the sample to ensure it is representative of each city’s prime market. All
price movements are in local currency unless stated otherwise. We define prime as the top 5% of the market by price. Currency exchange rates are as of the middle of the month stated.
3
Capital versus rental values
Berlin and Paris were the strongest
performers through 2019, with annual
growth of 8.8% and 6.4% respectively
Prime price movements
During 2019, rental values outperformed capital values in our prime index. We look
at both capital and rental value growth for each city and the factors that shape them
During 2019, the average capital value of Capital value growth by city driven by a recovering domestic economy
prime residential properties across world While prime prices on average remained and falling mortgage rates. While the market
cities remained flat, averaging an increase flat through 2019, price growth varied across remains predominantly domestic, there has
of 0.1%. This was down from 2.6% for 2018 the index. Berlin and Paris were the strongest been recent interest from Asian buyers.
and continued the slowdown in growth performers through 2019, with annual In China, rising mortgage rates and
seen since 2016. The slowdown accelerated growth of 8.8% and 6.4% respectively. The financial de-risking generally dampened
throughout the year and prices fell in German capital has seen strong interest from the national housing market. However,
many cities in the second half of the year buyers and investors looking for income Hangzhou and Shanghai continued to
resulting in an average decrease of -0.4% returns while prime property in the French perform well throughout the year, with
over the six months to December 2019. capital is viewed as a safe long-term store growth of 4.8% and 3.3% respectively.
Rental values performed better than capital of wealth. In both cities, undersupply These cities have strong business
values during 2019 with an average annual remains a key driver of values. environments and continue to attract
increase of 1.2%, an increase from the 0.4% Moscow was another strong performer talent from other parts of the country.
average growth over 2018. But, like capital during 2019 and one of only five cities in Across the rest of Asia-Pacific, Singapore
values, rental growth also slowed in the the index to see an increase of more than 2%, remained largely flat over the year, as cooling
second half of the year, with a 0.3% increase with annual growth of 2.3% to December 2019. measures introduced in 2018 continued to
compared with 0.8% for the first half. The market in the Russian capital is being have an impact. Nevertheless, the market
Average prime capital value growth compared with rental growth
Key Prime capital values Prime rental values
16.0%
14.0%
Turning point
During 2019, annual
12.0% rental growth
outperformed
annual capital
10.0%
growth for the first
time in a decade
Annual index change
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
Dec 18
Jun 19
Dec 19
Dec 06
Jun 07
Dec 07
Jun 08
Dec 08
Jun 09
Dec 09
Jun 10
Dec 10
Jun 11
Dec 11
Jun 12
Dec 12
Jun 13
Dec 13
Jun 14
Dec 14
Jun 15
Dec 15
Jun 16
Dec 16
Jun 17
Dec 17
Jun 18
Source Savills Research
savills.com/research 4
Capital versus rental values
Capital value growth City-by-city guide to the six-month and one-year changes in values to Dec 2019
Key Six-month change One-year change
10%
8%
6%
Moscow
A recovering domestic
4% economy and falling
mortgage rates is New York
driving growth High volumes of
prime stock have
Price change
2% contributed to
a price fall
0%
-2%
-4%
Hangzhou
-6% A strong business
environment continues
to attract talent
-8%
Los Angeles
Berlin
Paris
Hangzhou
Shanghai
Moscow
Tokyo
Sydney
Beijing
Barcelona
Madrid
Guangzhou
Singapore
Kuala Lumpur
Bangkok
Hong Kong
London
New York
San Francisco
Miami
Dubai
Cape Town
Shenzhen
Source Savills Research
saw a slight rebound in the second half of the business cycle. Additionally, Miami and New
year (+0.9%) as rising affluence among local York both have a high volume of prime stock.
residents and international buyer interest London’s prime residential market has
mean demand remains strong. Kuala Lumpur been impacted by Brexit uncertainty and
and Bangkok both experienced a 1.0% fall as stamp duty reform with prices down 1.5%
the cities grapple with oversupply following for the year. Geneva’s market has also felt
a rise in residential development over the the effect of uncertainty from the UK due
past few years. to the high share of international buyers
Meanwhile, Hong Kong also experienced in the market including British buyers.
a fall in prices through 2019 following social Cape Town was the biggest faller in the
unrest in the city and the US-China trade index over the past year, with a 6.3% decline.
war. It was down 1.5% for the year and -2.7% After several years of outperformance relative
during the past six months to December 2019. to the national housing market, Cape Town’s MARKET DRIVERS
In the US, Miami, San Francisco, New York prime market is undergoing a period of price Each chart includes
and Los Angeles all experienced price falls corrections following weakened economic a summary of the key
throughout the year. Tax changes at the sentiment and slowdown in demand. Dubai factors influencing capital
beginning of the year have reduced demand saw the next largest yearly decline, with a 5.8% value and rental value
for prime properties while purchasers have fall, as existing oversupply with continued growth in selected cities
become wary of buying near the top of the high levels of completions impacted values.
5
Capital versus rental values
Rental value growth City-by-city guide to the six-month and one-year changes in values to Dec 2019
Key Six-month change One-year change
10%
Los Angeles
8% A shift from buying to renting
in younger age groups has
contributed to rental growth
6%
London
4% Experienced a
slight rebound in
the second half of
the year driven by
Price change
2% strong activity and
low levels of stock
0%
-2%
-4%
Paris
-6% Prime rents have stayed
flat here following the
introduction of rent
controls in July 2019
-8%
Los Angeles
Miami
Moscow
New York
Berlin
San Francisco
Tokyo
Hangzhou
Shanghai
Paris
Shenzhen
Barcelona
Guangzhou
Madrid
Singapore
Beijing
Sydney
Hong Kong
London
Kuala Lumpur
Dubai
Note Data not available for Cape Town or Bangkok Source Savills Research
Rental value growth by city increased 1.9% in 2019. However, rents Dubai and Kuala Lumpur saw the largest
US cities generally saw capital values fall fell marginally (-0.1%) in the second half rental falls over the year, with -5.0% and
through 2019, but the rental markets have of the year as some stock starts to look -4.1% respectively. Both markets are facing
performed well as demand remains healthy. overpriced and landlords have become oversupply and potential renters have a lot
Los Angeles and Miami saw the largest less bullish. of choice and negotiating power.
increases in rents over 2019, with a 6.1% Rental values in Berlin experienced London saw a marginal fall for the year
and 4.8% increase respectively. a 0.6% fall in the second half of the year (-0.6%) but experienced a slight rebound in
Moscow saw the third highest growth despite a 2.8% rise for the year as a whole. the second half of the year driven by strong
in rental values over the year, with a 3.8% Uncertainty around rental caps has activity and low levels of stock. Hong Kong
increase. The prime rental sector has dampened sentiment in the city viewed was the only other city in the index to see an
seen high levels of activity with demand as an attractive residential investment. average rental fall through 2019, down 0.4%,
primarily driven from corporate tenants. Similarly, prime rents have remained which, like capital values, accelerated in the
Unlike the purchaser market, the rental flat in Paris following the introduction of second half of the year with a 1.7% fall for
market in Moscow has a high share of rent controls in July 2019, although prime the six months to December 2019.
international demand. apartments are generally not affected by
Tokyo has seen strong growth in the measure and growth has kept in line
rental values over the past few years and with the market as a whole.
savills.com/research 6
Buying, owning, selling costs
Stamp duty and agency
fees can add significantly
to overall buying costs
for an overseas buyer
The cost of ownership
around the globe
Purchase price is just part of the picture. Overseas buyers need to factor in the
level of taxation and fees involved in buying, owning and selling in different cities
The costs associated with purchasing, third most expensive city for a buyer as Buyers in Paris face a more evenly weighted
owning and selling a property as a non- the agency fees are paid for by the buyer. split of taxes. Purchase and selling costs are
resident can increase the price significantly. Conversely, the exit is easier as there are 7% and almost 5% respectively, with owning
In this context, Hong Kong is the most no costs to sell. taxes over five years of 4.2%.
expensive of all the global cities in our index. At the other end of the table, the cheapest Although buying costs are close to 10%
Here, an overseas buyer can expect to pay an option is Moscow. With no stamp duty, of the purchase price, low owning (0.7%)
additional 33.3% of the purchase price – most the main costs come when it’s time to sell, and selling costs (2.3%) make London’s total
of which is stamp duty for overseas buyers. with the 3.5% agency fee paid by the seller. costs in line with many other global cities.
Second, third and fourth spots are taken US cities typically have lower buying
by Singapore, Tokyo and Sydney. Berlin costs, but higher selling costs – as a result
completes the top five and is actually the of high agency fees – and owning costs.
Buying, owning and selling a US$2 million property
Additional costs for an overseas buyer across our index of world cities
Key Cost of buying Cost of owning (over 5 years) Cost of selling
33.3%
35%
30%
25.2%
Percentage of property price ($2M)
25%
20.0%
19.0%
18.2%
17.6%
20%
16.0%
15.1%
14.7%
13.0%
13.0%
12.9%
15%
7.8%
10%
6.0%
5.7%
5.7%
4.5%
5%
0%
Hong Kong
Singapore
Tokyo
Sydney
Berlin
Madrid
Paris
Miami
New York
Los Angeles
San Francisco
London
Shanghai
Dubai
Beijing
Moscow
Shenzhen
Note We have assumed a non-resident, overseas buyer in search of a US$2 million property. This is for use as a second home
for less than nine months of the year over a five-year hold. No capital growth has been applied Source Savills Research
7Global outlook 2020
Global cities
Capital values
growth forecast
6% to 7.9%
outlook
4% to 5.9%
2% to 3.9%
0% to 1.9%
0% London
Prime residential capital value 0% to -1.9% 2% to 3.9%
growth forecasts for 2020 -2% to -3.9%
-4% to -5.9%
-6% to -7.9%
Cities across the Savills Prime Index:
World Cities are forecast to see average
capital value growth of 1.8%. This is a
marginal increase from 2019, which was
the lowest increase since 2009, but
still well below the peak increase of
9.3% in June 2013. Nevertheless, there
are markets that are expected to defy New York
-1.9 to 0% Paris
this trend. Lisbon, Sydney and Moscow 4% to 5.9%
are projected to be the best performers
as a combination of growing demand
and low interest rates drive growth
San Francisco
in these markets. 0% to 1.9% Lisbon
Uncertainty impacted the global
6% to 7.9%
property sector through 2019 and the
prime residential sector was no exception.
This uncertainty is expected to continue
through the coming year. However, a Los Angeles
range of factors are also at play in each 0% to 1.9%
city’s prime market and local issues, such
as government policy and tax changes, are Miami
often significant drivers. -1.9 to 0%
Globally, one of the key drivers of the
market in cities where values are expected
to fall is a supply and demand imbalance,
including New York, Miami, Dubai and
Kuala Lumpur. Hong Kong and Mumbai
are the other two cities on the list, both
of which are being affected by local
North America: Marginal price
increases expected in San
politics and economies. Francisco and Los Angeles
Performance in US cities has been subdued
by national tax changes and oversupply
Top cities for growth in capital values in some key markets. In addition, the prime
market in New York is also adjusting to
higher mansion tax rates. Small price falls
1. Lisbon 6%-7.9%
are expected to continue in New York and
Miami over the coming year, but prices
2. Moscow 6%-7.9% are expected to marginally increase in
San Francisco and Los Angeles.
3. Sydney 6%-7.9%
4. Amsterdam 4%-5.9%
5. Guangzhou 4%-5.9%
6. Hangzhou 4%-5.9%
7. Paris 4%-5.9%
Source Savills Research
savills.com/research 8Global outlook 2020
Europe: Moscow and Lisbon forecast
to be top performers in the region
Moscow and Lisbon are forecast to be the region’s strongest
performers in 2020, as their prime markets continue to
mature. Paris and Amsterdam are also expected to see
strong price growth. Berlin has been the strongest
Amsterdam performer in recent years and investors will be waiting
4% to 5.9% to see if the rental cap comes into force. If it does not come
into effect, prices are forecast to rise but at a slower rate.
Shenzhen
0% to 1.9%
Beijing
0% to 1.9%
Berlin Guangzhou
2% to 3.9% 4% to 5.9%
Moscow
6% to 7.9%
Shanghai
Geneva 2% to 3.9%
0% to 1.9% Bangkok
0%
Kuala Lumpur Tokyo
-1.9 to 0% 0% to 1.9%
Barcelona
0%
Madrid
0% Hangzhou
4% to 5.9%
Dubai
-2% to -3.9% Hong Kong
-6% to -7.9%
Mumbai
-1.9 to 0%
Sydney
6% to 7.9%
Singapore
2% to 3.9%
Cape Town
2% to 3.9% Asia-Pacific: Sydney predicted to
have the largest growth in the region Source Savills Research
Uncertainty is forecast to continue to impact prime residential markets
through 2020. Sydney is predicted to lead the region, with growth
supported by lower interest rates, increasing immigration, and continued
increases in demand. However, the market remains sensitive to global
uncertainty and price rises could be reactive to fluctuations in the market.
Ongoing bush fires may also be a near-term mitigating factor as they start
to impact on national GDP growth. In mainland China, cities are forecast
to see price growth, but at rates well below the double digit annual growth
seen between 2013 and 2017. The continuation of the financial de-risking
campaign has resulted in an over-abundance of caution in these markets.
9Prime rental values
New York is the only
city in the index where
the average weekly rent
for an apartment is
higher than for a house
Rental values
There is large demand for prime rental properties
in international business and financial hubs
Looking at the average weekly rent paid ahead of London, Paris and Los Angeles. As is the case with capital values,
for a prime house, Hong Kong remains top As international business hubs with high Cape Town and Kuala Lumpur rank as
of the price league at US$7,060 per week, levels of domestic wealth, demand for prime lower-valued cities for prime residential rents
followed by Tokyo at US$6,000 per week. rental properties is high. and are two of only three cities in the index
Apartments make up the majority of the New York tops the league for the rental where a prime house costs less than US$1,000
prime market in both cities and houses cost of a prime apartment and is the only per week, the other being Hangzhou.
command a premium where the value city in the index where the average weekly
of land is high. rent for an apartment is higher than for
Moscow and New York rank third and a house. This reflects the high-quality
fourth for a prime house at US$4,180 supply of apartments at the top end of
and US$4,080 per week respectively, just the market and their prime locations.
Prime residential rents City-by-city prices and comparison between a house and apartment
$8,000
Key House (4,000 sq ft) Apartment (2,000 sq ft)
$7,000
$6,000
$5,000
$4,000
Weekly rent (US$)
$3,000
$2,000
$1,000
$0
Madrid
Beijing
Barcelona
Dubai
Guangzhou
Hangzhou
Cape Town
Kuala Lumpur
Hong Kong
Tokyo
Los Angeles
Moscow
New York
London
Paris
San Francisco
Sydney
Miami
Amsterdam
Singapore
Shanghai
Shenzhen
Source Savills Research
savills.com/research 10Prime residential yields
Los Angeles, USA
What is happening to yields?
Average yields across our prime cities increased in 2019, standing at an
average of 3.2% in December 2019 compared with 3.0% the year before
In 2019, growth in the rental market Gross prime residential yields by city in Dec 2019
generally held up better than the purchaser
market. As a result, average yields increased 6.0%
in the first half of 2019, after being on a
downward trend since December 2014.
5.0%
Average yields continued moving
upwards in the second half of the year as
rental growth continued to outpace price 4.0%
growth, standing at an average of 3.2%
for the index as a whole in December 2019
Yield
compared with 3.0% a year before. 3.0%
Los Angeles is the highest-yielding
city in the index, at 5.5%. Yields here
have been pushed upwards due to a shift 2.0%
from buying to renting, generally among
younger age groups.
1.0%
Cities in Asia-Pacific tend to be lower
yielding, with the bottom 10 cities for
average yields all located in this region.
0%
Chinese cities recorded the lowest yields,
ranging between 1.5% and 1.7%. Bangkok
Los Angeles
Moscow
Cape Town
Dubai
Bangkok
New York
Miami
Amsterdam
Kuala Lumpur
Barcelona
San Francisco
Tokyo
Paris
Berlin
Madrid
Seoul
Beijing
London
Mumbai
Sydney
Singapore
Hong Kong
Hangzhou
Shenzhen
Shanghai
Guangzhou
and Kuala Lumpur are comparatively high
yielding for the region, at 4.6% and 3.6%
respectively. In Europe, Moscow records
the highest yield at 5.0%, while London
has the lowest at 2.9%.
Source Savills Research
11UK Residential – Autumn 2019 World Research - 2019
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Research Global Residential
Sophie Chick Sean Hyett Justin Marking Hugo Thistlethwayte Jelena Cvjetkovic
Director Analyst Head of Global Head of Global Director
+44 (0)20 7535 3336 +44 (0)20 7409 8017 Residential Residential Operations Global Residential
sophie.chick@savills.com sean.hyett@savills.com +44 (0)20 7499 8644 +44 (0)20 7409 8876 +44 (0)20 7016 3754
jmarking@savills.com hthistlethwayte jcvjetkovic@savills.com
@savills.com
Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offi ces and associates throughout the Americas, UK, Europe, Asia-Pacifi c,
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