Research article

A Decade Of Change

How global values have changed in the past decade since Savills began its world cities programme

The tables have turned once again as the ‘old world’ cities of the West enjoy a revival in fortunes, following more than a decade of growth for ‘new world’ cities. It’s now the turn of those new world cities to take a back seat as falling or stagnating markets have an effect on real estate deals and values.



We have been studying our core world cities for 10 years, and what a decade it has been. The roller-coaster ride of the global financial crisis presented an opportunity for real estate in new and emerging markets, particularly Asia, to rival those in the West.

We started reporting on global residential values in our Insights: World Cities Review publication after the global financial crisis (GFC) in 2011. At the time, we talked a lot about the strength of the ‘new world’ markets (Shanghai, Singapore, Hong Kong, Mumbai and Moscow) against the ‘old world’ markets (Paris, Tokyo, London, Sydney and New York). Among these world-class cities, price growth in the new and emerging economies had averaged 123% between December 2005 and mid-2011, compared with just 32% in the established cities of the old world.

The real estate wheel of fortune has turned again and we find that the activity and growth enjoyed by Asian markets in the wake of the GFC is now being experienced in the West. The capital value of all residential properties in the same old world markets grew by an average of 35% between 2011 and December 2015, while the new world cities grew by just 6% over the same period.

There is still a price performance gap between old and new world-class cities, but that has narrowed over the past two years as Europe and the US have recovered, while Asia and emerging markets have fallen or stagnated (see fig.1).

Figure 1

FIGURE 1SEU residential capital value growth

Source: Savills World Research

Since reporting on our first collection of world cities we have expanded our research to look at other cities that are important – or are becoming important – on the global stage, and which at various times have been added to the original core, world-class cities to inform different 12 Cities reviews. Below (see fig.2) is the 10-year capital value growth of the global cities that we monitor. Japan remains a land of very low price growth, while Mumbai tops the table with 184% growth over the whole period.

Figure 2

FIGURE 2Ten-year residential capital value growth

Source: Savills World Research

Ten-year residential capital value growth in all global cities averaged 73% to the end of 2015. The highest growth was seen in Mumbai, Shanghai and Hong Kong. The lowest rates of growth were in the high-supply US cities of Miami, LA and Chicago. Dublin’s residential values are still 26% below their 2005 levels, although this represents recovery after an incredible fall from their 2006 peak to their 2012 trough of -57%.

It would appear that some of the cities at the bottom of the league table will have the biggest scope for capital value growth in future, provided their populations and economies grow. Those nearer the top may be more fully valued and therefore most exposed to price falls or stagnation, particularly during economic recession.

Our analysis of occupier demands and rental growth across all sectors (residential and commercial) should prove a good guide to the fundamentals of different markets and would seem to point to the best prospects for capital growth lying among the ‘upstart cities’ at the foot of the table, which are enjoying population growth and occupier demand from burgeoning digital and creative industries.


The experience of residential property markets over the past decade has been reflected in other sectors of real estate too. The most notable is the difference in performance between the new world markets of Asia and the old world markets of Europe and North America.

In 2009, after the collapse of Lehman Brothers and before QE had been widely deployed, the big-ticket deals were all taking place in Asian cities, often in regions of China that people in the West had never heard of. Many of them were big, state land deals. Chinese and Asia Pac markets were booming in the wake of very high economic growth and wealth creation in emerging markets. By 2009, 72% of the value of deals in the top 20 cities took place in Asia, mostly China. Only 10% of the biggest global deals took place in the erstwhile powerhouse of North America and overall global volumes were down by 66% on their 2007 peak, allowing the Asian markets to dominate.

In 2015, not only had the overall value of deals that took place in the top 20 cities increased by 187%, but the weight of global real estate money had shifted back from East to West. Investor attention moved away from Asia and is now firmly focused on the US, where 46% of the value of all top 20 city deals took place in 2015 (see fig.3, below).

Figure 3

FIGURE 3Savills world-class cities – top 20 cities by deals volume

Source: RCA/Savills World Research

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