The first half of 2025 has been defined by a convergence of geopolitical and economic disruptions—an environment shaped not by a single black swan event, but by a bevy of them.

From escalating trade tensions and shifting tariff regimes to volatile financial markets, the global landscape has become increasingly complex. For prime residential markets, this has meant navigating a climate where uncertainty is no longer episodic but structural.

A notable shift towards deglobalisation has emerged, characterised by protectionist policies and geopolitical fragmentation, dampening cross-border investment sentiment. Even as interest rates have stabilised in many markets, the broader investment climate remains cautious. Buyers are increasingly attuned to political risk, particularly in jurisdictions where regulatory frameworks and fiscal policies are in flux. This has led to a slowdown in sales activity across several key global cities. However, several markets remain very resilient.

Yet, amid this caution, rental markets have proven remarkably stable. In the first half of 2025, prime residential rents rose by 2%, outpacing capital value growth, which increased by just 0.7%. This divergence underscores a broader investor preference for income-generating assets in an environment where capital appreciation is harder to forecast. It also reflects the growing appeal of flexibility among tenants, many of whom are adopting a wait-and-see approach before committing to ownership.

World cities prime residential capital value and rental growth

Despite the headwinds, prime residential property continues to hold value, not just as a financial asset, but as a reflection of identity and lifestyle. These homes often form part of a broader portfolio that spans continents. In this sense, prime property remains a key asset class, and indeed, a safe haven in times of uncertainty.

Looking ahead, policy shifts will likely continue to reshape investment dynamics. From foreign buyer surcharges to evolving tax regimes, the policy environment remains fluid. Navigating this uncertainty will help to unlock opportunities in prime residential markets across the world.

There are reasons for cautious optimism. Markets with strong fundamentals—limited supply, lifestyle appeal, and deep pools of demand—are better positioned to weather volatility. These cities continue to attract global capital, not just because of their economic credentials, but because they offer a compelling blend of security, connectivity and culture.

As we move into the second half of the year, confidence will remain the key driver. Buyers and renters are taking a pragmatic approach, balancing long-term aspirations with short-term realities.

_{Read the articles within Savills Prime Residential Index: World Cities below.}