Madrid and Barcelona: the cities where luxury housing is set to rise the most in 2024

Madrid and Barcelona are among the top 10 cities in the world where the price of luxury housing will grow the most in 2024, according to forecasts from Savills' 'World Cities Prime Residential' index. The increase in international demand experienced by both cities and the supply shortage of this type of housing will cause rises of between 2% and 3.9% this year. Of the 30 cities analysed, Sydney (8%-9.9%) and Dubai (4%-5.9%) stand out, although overall growth will remain at 0.6%.

The international real estate consultancy anticipates a moderate increase in the value of prime properties this 2024, after the 2.2% achieved in 2023, while many international markets continued to experience widespread declines in the residential market. This comes after Madrid and Barcelona were also named among the favourite cities for wealthy home buyers, along with Malaga. 

"The luxury housing market is slowing to more sustainable levels from its post-pandemic peaks," the Savills report notes. "Generally, markets with comparatively lower prices than those in other cities are more likely to rise in the coming year."

Sydney and Dubai have the best projections, where an increase in the high net worth population is expected. Meanwhile, Cape Town, Barcelona, Madrid and Kuala Lumpur are the cities with the lowest average prime prices per square metre, below €8,000, and all four will maintain an upward trend to grow between 2% and 3.9%.

"However, in Madrid and Barcelona, the maximum prices in prime areas are well over €12,000 per square metre, and even in ultra-prime projects, they reach levels close to €20,000 per square metre," added Savills.

The consultancy's study states that "caution in the face of economic uncertainty and interest rate developments will set the pace in 2024. The possibility of central banks cutting interest rates in mid to late 2024 may boost activity in the main luxury real estate markets and could surprise the upside for prices in the latter part of the year.

Although the prime residential market is less dependent on the mortgage market and macroeconomic environment than the general residential market, "worsening macroeconomic conditions may undermine confidence and cause many potential buyers to adopt a cautious approach," they conclude.

Prime rental grew by 5.1% worldwide and by up to 39% in Lisbon

Prime rental prices in the world's major cities grew by 5.1% on average in 2023, more than twice as much as sales prices (2.2%). Despite continued economic uncertainty, prime rents have increased in 28 of the 30 cities surveyed by the international real estate consultancy.

Lisbon had the highest increase in prime rents in 2023, with a 39% year-on-year increase. Barcelona (7.3%) and Madrid (5.7%) were among the cities with the highest prime rental price increases in Europe last year, in third and fifth position respectively.

According to Savills' 2024 forecasts, "prime rental prices will increase slightly in the 30 cities surveyed, as buyers continue to target rental markets, although this growth will remain below the historical average".

• Find luxury homes for sale in Spain