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The 2025 Global Luxury Residential Recap and 2026 Forecast
Kelly Robinson
Kelly Robinson
One Global Tea, January 2026 Edition
Luxury real estate in 2025 did what it always does when the world gets noisy. It separated the nice-to-have markets from the must-own markets.
Across major global cities, prime pricing cooled overall, not because wealthy buyers disappeared, but because the rate cutting narrative kept getting delayed and buyers got more price conscious. Knight Frank’s Prime Global Cities Index showed average prime price growth of 2.5 percent in the twelve months to the end of September 2025, with a clear two speed reality underneath the headline.
Meanwhile, the lifestyle and wealth drivers did not take a year off. Mobility stayed high, cash stayed powerful, and prime homes continued to behave less like shelter and more like a global asset class with a view.
What Defined Luxury in 2025
Three themes showed up everywhere, even when the accents changed.
Turnkey, well located, supply constrained product kept moving. Complicated layouts and story heavy assets did not. Prime price growth cooled largely due to interest rate uncertainty and delayed cuts, but the direction of travel for global rates is now clearly downward, setting the stage for stronger performance in 2026.
In many global cities, prime rents outpaced capital growth in 2025. Investors leaned toward income and flexibility, while tenants still paid up for quality and location. Prime living remained in demand, but optionality mattered.
Climate resilience, insurance, safety, wellness, and governance moved from perks to requirements. Design stayed neutral, buildings stayed conservative, and buyers focused less on flexing and more on durability.
Layered on top of all of this is the global wealth transfer. Trillions of dollars in real estate are expected to change hands over the next decade, reshaping how families structure and hold luxury property across borders.
Top Ten Luxury Markets in 2025
Based on annual prime price change rankings from Knight Frank’s Prime Global Cities Index, these markets led global luxury performance in 2025.
Tokyo
Seoul
Bengaluru
Dubai
Mumbai
Singapore
Madrid
Zurich
Manila
Nairobi
The headline here is not just which cities performed best, but why. Asia remained the growth engine, supported by domestic wealth, limited prime supply, and strong demand for existing stock. Dubai stayed firmly on the global podium, even as pricing conversations became more disciplined and more mature.
The 2026 Forecast
My outlook for 2026 is optimistic, but not naive.
The setup is improving. The direction of interest rates is down, liquidity tends to follow, and true prime supply remains structurally constrained in most global cities that matter. Knight Frank expects global prime price growth to strengthen in 2026 as rate cuts begin to work their way through buyer behavior.
But 2026 will still be selective, because the world is not short on capital. It is short on conviction.
Buyers will pay for certainty and punish ambiguity.
What Will Matter Most in 2026
Trust means rule of law, title clarity, building governance, and exit liquidity. Scarcity means real prime supply, not glossy renderings or theoretical demand.
If a market needs leverage to work, it will feel pressure first. If it works in cash, it stays liquid. This distinction will matter more in 2026 than it did in the past three years.
Markets flagged for bubble risk are not collapsing, but buyers are underwriting more carefully. Pricing discipline, insurance costs, and long term livability are now part of every serious acquisition conversation.
Projected Top Ten Luxury Markets for 2026
This list is a forward looking projection based on 2025 momentum, structural demand drivers, supply constraints, and where rate sensitivity is likely to ease rather than bite.
Tokyo
Dubai
Seoul
Singapore
Madrid
Zurich
Miami
Monaco
Lisbon
Geneva
These markets share common traits. Strong wealth inflows, global buyer recognition, limited true prime supply, and a reputation for stability. Some are lifestyle driven, some are financial safe havens, and some benefit from both.
Final Sip
Luxury real estate is no longer about buying the most impressive address. It is about buying the least problematic one.
In 2026, the best performing markets will be those that offer certainty, liquidity, and long term relevance. Buyers are not chasing hype. They are building portfolios that can survive volatility, generational change, and shifting global priorities.
That is not a slowdown. That is a maturation.
And it is exactly how real luxury behaves.
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