Dynamic landscape for real estate sector in 2025

According to a recent report by Savills, 2025 presents a dynamic landscape for the real estate sector, offering both opportunities and challenges. This year the global real estate services company expects to see global real estate investment turnover rise by 27% to $952 billion, driven by factors like lower interest rates and increased investor confidence, and to surpass the $1 trillion mark in 2026 for the first time since 2022.

Says Dr Andrew Golding, chief executive of the Pam Golding Property group, which is Savills’ exclusive residential real estate partner in Africa: “Notwithstanding the economic turbulence of recent years, prime residential markets have proved remarkably resilient . The report says however, that despite upticks in several markets towards the end of 2024, there is no escaping the reality that global real estate markets are navigating complex landscapes shaped by economic uncertainty, geopolitical shifts, and evolving priorities.

“Savills’ latest Global Risks Report makes the point that perhaps unsurprisingly, geopolitical risks dominate concerns for 2025. Their Global Risks Perception Survey also shows a rising sense of urgency regarding the environment. Extreme weather events are the second highest-ranked challenge in 2025, and are anticipated to become even more pressing, achieving the top ranking in the longer-term, 10-year risk outlook.”

Illustrating this, the Report notes that the recent wildfires tragically affecting Los Angeles are only the latest example of the impact extreme weather can have on urban areas. Real estate has a key role to play – after devastating wildfires in Australia in 2019 and 2020, for example, the country’s National Construction Code was updated to stipulate fireproof building materials, design and construction, and insists on a minimum distance between vegetation and buildings in high-risk areas.

Adds Dr Golding: “An improved economic backdrop is the foundation for real estate market recovery in 2025. As Savills states… while the world faces many challenges, collaboration will be key to navigating them. Davos 2025 highlighted the need for global cooperation to tackle geopolitical, environmental, and technological challenges. For real estate, this means prioritising resilience and innovation.”

According to Kelcie Sellers, Associate Director, Savills World Research – in their Prime Residential Outlook 2025, prime buyers worldwide will likely continue to prioritise lifestyle in their choice of residential property. “Dubai, a perennial leader for capital value appreciation, is forecast to top the leaderboard in 2025 with prime price growth of 8-9.9% for the year. A market with growth, supported by a strong supply pipeline, Dubai has seen a number of projects in recent years which have rewritten the market definition of ‘prime’.

“Sydney is also expected to record strong growth, but here it will be driven by a lack of supply, rather than new supply. The persistent scarcity of luxury properties is expected to limit buying opportunities. Coupled with sustained demand from domestic and international buyers and a relatively weaker currency, prime residential prices are anticipated to increase by 4-5.9% during 2025.

“Similar levels of growth are forecast for Madrid, Barcelona and Lisbon. In the Spanish cities, a significant portion of demand comes from foreign buyers with dollar-denominated savings looking to take advantage of a comparatively weaker euro. Lisbon’s positive momentum, supported by forecasts of further interest rate cuts, should also continue.”

Sellers adds: “Also in this projected growth bracket is Cape Town, a market where confidence has recovered, economic activity has improved, and domestic and international demand is ongoing. Further interest rate relief and optimism in South Africa’s economic prospects for 2025 should underpin sales activity and growth in prices in the new year.”

For further information visit www.pamgolding.co.za

Posted by The Know - Pam Golding Properties