Luxury home prices around the globe are expected to increase, particularly in prime real estate markets.

Looking ahead, wealth hubs such as Dubai, New York, Geneva, and Paris will lead the pack when it comes to luxury property growth, according to Knight Frank's Prime Global Forecast for 2025. The prime sector -- defined as the top 5 percent of the market -- had its strongest rate of price growth since 2022 in the first quarter of 2024 at 4.1 percent signaling a recovery, the brokerage previously reported. At the same time, 78 percent of the 44 markets analyzed recorded positive annual price growth while only 19 percent experienced a decline.

"This year, many prime housing markets returned to growth after prices retreated in 2023," said Liam Bailey, global head of Knight Frank's research department, in the report. "With rates on their way down, albeit slowly, the outlook for 2025 anticipates further growth, led by Dubai, New York, Geneva, and Paris. However, with affordability still tight and inventory levels rising, several key markets are facing a standstill in prices, with one or two at risk of a decline."

At the top of the list is the City of Gold with an anticipated 5 percent increase in prime real estate prices in 2025. The report attributes the climb to a whopping 52 percent drop in the number of listings in prime Dubai neighborhoods over the past year, in addition to a 65 percent dip in properties priced at $10 million and above. Over the last 12 months, real estate values in the United Arab Emirates city have jumped roughly 20 percent and in Q3, they hit an all-time high due to a surge in wealthy international buyers, per Knight Frank's Q3 Dubai residential market review.

In New York, where conditions have slightly improved since 2019, the brokerage predicts a 3 percent growth in prices as inventory remains low. More specifically, the number of active listings is 54 percent below the five-year average, putting sellers in a favorable position come springtime. Elsewhere, Geneva's luxury market is anticipating a 3 percent price growth. The Swiss city has long attracted wealthy, high-net-worth newcomers from around the world for a number of reasons, including its strong currency, competitive tax rates, and overall quality of life. Similarly, Paris is also expected to see a 3 percent price increase, supported by strong demand and limited supply.

When it comes to where in the world prices could either stay the same or decline, expensive hubs such as Singapore, Miami, and Hong Kong, for example will see their annual growth slow in 2025. On the other hand, in Los Angeles and Beverly Hills, where prices have ticked up 52 percent over the past five years, the market could actually decline as inventory levels increase. "While prices are likely to be down overall, expect some record sales for truly best-in-class properties," Bailey says. "Some buyers will still pay to access unique opportunities."