Following headwinds in 2025, the global market enters 2026 on an uncertain footing
Capital Value forecasts
While economic activity has remained relatively steady, elevated interest rates and geopolitical instability continue to be a challenge for most major markets. Across the 30 cities in our index, we forecast average prime capital value growth of 1.3% in 2026, reflecting a market that continues to grapple with mixed sentiment and structural supply limitations.
Residential property will remain central to policy and economic debate in 2026, particularly across North America and Europe. As affordability, access and growth concerns converge, governments face rising pressure to reform tax frameworks, incentivise development, and deliver long‑term housing strategies that balance investor confidence with social stability.
League leaders
Five markets stand out as being the strongest potential performers in 2026: Seoul, Tokyo, Madrid, Lisbon and Cape Town are each forecast to deliver prime capital value growth above 4%, supported by a persistent mismatch between strong demand and limited supply. This is a theme that continues to drive outperformance across a select group of global cities.
In Seoul, prime apartment values continue to be shaped by deep‑rooted structural constraints, including scarce land, slow development pipelines, and highly concentrated demand within established core districts. Having risen by 14.3% in 2025, prices are forecast to grow by a further 6–7.9% in 2026. While tighter regulations and more restrictive financing conditions are squeezing transaction volumes, they have so far done little to ease pricing pressure.
Tokyo’s performance is down to a combination of acute supply scarcity and enduring investor appeal. A widening gap between new apartment prices and construction costs raises sustainability questions, while competition for land, particularly from office developers, continues to restrict residential delivery. Supported by sustained international investment, Tokyo remains one of the most supply‑constrained markets in the index, with price growth of 4–5.9% forecast in 2026.
In Madrid, the prime market continues to be supported by a deep pool of affluent domestic buyers and ongoing capital inflows from Latin America, increasingly complemented by US demand. Following growth of 4.2% in 2025, thin development pipelines and new schemes reaching record price points underpin a predicted 4–5.9% rise this year.
Lisbon remains buoyed by strong domestic and international demand. While proposed government incentives aim to stimulate supply, prime availability remains tight, pointing to continued, if more measured, price growth.
Cape Town enters 2026 with strong momentum after an exceptional year, with our forecasts reflecting internal migration, resilient foreign demand and pronounced supply constraints, particularly along the Atlantic Seaboard.
Everything in moderation
We expect growth across most US and European prime residential markets to be modestly positive or broadly flat in 2026, with average price increases of just over 0–1.9% forecast on both sides of the Atlantic. In the United States, we expect to see pent-up demand unlocked by gradually improving affordability, supported by easing mortgage rates and rising incomes.
Miami continues to buck trends with its luxury segment supported by sustained business inflows, corporate relocations, and ongoing interest from high net worth individuals. While the pandemic-driven migration surge has eased, the city’s structural economic appeal continues to underpin demand, with prices forecast to rise by 2–3.9% in 2026.
Across Europe, we’re finding conditions are more mixed. Milan is set to face more cautious sentiment as elevated pricing constrains buyers, while Rome benefits from robust demand for prime properties amid limited supply. Athens is expected to sustain modest growth as regulatory reforms unlock previously stalled developments. We expect Amsterdam will remain relatively insulated from policy uncertainty and higher financing costs, and Paris is forecast to extend its gradual recovery, supported by improving buyer confidence.
Chinese market challenges
Prices are forecast to dip by between 2% and 3.9% in 2026 across the Chinese cities in our index. This is due to weak demand and demographic challenges. While prime new-build properties may experience stability, we expect the broader secondary market to remain firmly in decline. With 22 consecutive months of year‑on‑year declines recorded across all surveyed cities, sentiment remains fragile, and a meaningful recovery in 2026 appears unlikely.
Capital values
Regional divergence emerges in global prime residential performance
Capital value growth averaged 0.8% in H2 2025, and full‑year growth was 1.8%, led by Tokyo, Seoul, Dubai, Amsterdam and Cape Town. All these cities recorded annual growth above 6%, and all share a similar environment of structural prime undersupply, sustained or rising levels of local and international demand, and strong lifestyle or investment appeal.
Exceptional expansion
Tokyo recorded the strongest performance, delivering capital value growth of 12.5% in H2 2025 and full-year growth of 30.1%. This surge was driven by escalating construction and labour costs, and a weak yen that made Japanese real estate attractive to international buyers.
Foreign capital accounted for around 27% of national transactions and 40% of new apartment sales in central Tokyo, with demand originating from the United States, Europe, Southeast Asia and Mainland China. This activity has prompted policymakers to consider potential restrictions on foreign ownership, given rising concerns around affordability, and a focus on maintaining market stability into 2026.
Seoul was a standout performer in 2025, with capital values rising by 8.7% in H2 and 14.3% over the year. Prime apartments proved highly resilient despite tighter regulation and financing. Transaction volumes softened, but limited new supply, firm seller pricing and pre‑emptive buying continued to drive values higher.
Continued momentum
Dubai recorded capital value growth of 3.6% in H2 2025 and 11.2% for the full year, underpinned by political stability, pro‑business regulation and its tax‑free status. The off‑plan segment delivered 73% of transactions above AED 10 million ($2.7 million) in 2025, up from 70% in 2024. Constrained prime supply sustained prices last year, even as growth was beginning to normalise from the highs of the early 2020s. However, there is also a significant pipeline of mainstream stock, which could contribute to a two-tier market.
Confidence drivers
Amsterdam saw 6.3% growth in 2025, supported by improving financing conditions and a tight labour market, reinforcing buyer confidence. While the non‑prime market shows early signs of stabilisation partly due to the Affordable Housing Act and increasing supply – the prime segment is comparatively insulated, with demand consistently outpacing available stock.
Cape Town recorded 6.0% growth in 2025, with 2.7% growth in H2 2025. The Atlantic Seaboard dominated activity. Cape Town's unique combination of natural setting, cultural appeal and favourable rand‑denominated pricing has reinforced its position as both a lifestyle hub and a compelling investment market.
US softness
The US experienced broad‑based weakness. Every major US market saw capital values decline in H2 2025, with only New York City delivering (marginal) annual growth of 0.5%. Elevated mortgage rates (above 6%) have constrained liquidity and slowed activity even at the prime end. High financing costs continue to weigh on buyer sentiment, delaying decision‑making and suppressing transaction volumes.
Diverging destinations
Lifestyle remains the dominant theme, with Dubai, Lisbon, Madrid and Cape Town serving as leading destinations for high net worth individuals and global talent migration. Meanwhile, Barcelona’s pipeline for luxury new‑builds is approaching zero, pushing affluent buyers into the second‑hand market and supporting continued price appreciation.
In Asia Pacific, the narrative is mixed. Tokyo, Seoul, Sydney, Mumbai and Kuala Lumpur remain regional powerhouses supported by international capital and strong end‑user demand. Mumbai’s luxury segment continues to benefit from demand for larger homes and hybrid‑work dynamics, while Seoul's core districts maintain concentrated demand despite fewer transactions. Conversely, major mainland Chinese cities (Beijing, Shanghai, Shenzhen, Guangzhou and Hangzhou) faced pressure in the resale market in 2025, so whilst prime new‑build stock remains resilient, the broader outlook is subdued.
