Prices of luxury properties in Dubai rose by 48.8 per cent in the year to June, setting the pace in first place in a well-regarded international growth index.
The strong price growth meant Dubai maintained top position in the Knight Frank Prime Global Cities Index, a place it has now occupied for eight consecutive quarters.
Since hitting a pandemic low in the third quarter of 2020, luxury property prices in Dubai have soared by 225 per cent.
Average annual prices rose 1.5 per cent across the 46 markets covered by the Knight Frank Index in the 12 months to June.
That is markedly lower than the peak of 10.2 per cent seen in the last quarter of 2021, but is the strongest rate of growth since the third quarter of last year.
“Global housing markets are still under pressure from the shift to higher interest rates – but the latest results from the Knight Frank Prime Global Cities Index confirm that prices are being supported by strong underlying demand, weak supply following disruption to new-build projects during the pandemic, and an ongoing return of workers to cities," said Liam Bailey, global head of research at Knight Frank.
"As uncertainty over the direction of inflation appears to have reduced in recent months – price adjustments in many markets are likely to be less pronounced than was expected even three months ago.”
Over the three months to June, 57 per cent of cities in the index experienced price rises.
Tokyo and Manila took second and third place on the index at 26.2 per cent growth and 19.9 per cent respectively.
Stockholm was the city with the most improved performance, rising to 10th place in the second quarter, coming up from 41st in Q1.
Knight Frank noted that London, which is in 29th place, while continuing to record falling prices in the second quarter, had experienced strengthening demand over the past year.
"The number of potential buyers in London in July surpassed the five-year average by 24 per cent," Knight Frank said.
"This resilience isn't surprising, as around half of sales within Zone 1 [central London] typically involve cash transactions.
"Moreover, the market is being supported by the relatively weak pound benefitting foreign buyers, and the gradual return of overseas travel to pre-Covid levels."
West coast vs East coast
Farther down the rankings, New York recorded a 3.9 per cent fall in luxury property prices over the 12 months to June, thanks largely to rising borrowing costs and what Knight Frank called "evolving work patterns".
"While more office employees are returning to Manhattan, the demand for high-quality properties hasn't yet halted a decline in prices," the index said.
Indeed, Knight Frank found that there was a noticeable shift in demand for luxury properties in the US from the western regions to the east coast, with "affluent families moving away from California".
This is best illustrated by the 7.5 per cent growth in prices in Miami and the 11.1 per cent fall in prices in San Francisco over the 12 months to June.
Miami was fourth in the Knight Frank Index. San Francisco was 44th.