The elegant jewel of the old world, the beating heart of the new, and the young pretender; there are compelling reasons to invest in property in London, New York, and Dubai.
If buying in all three is not an option then your choice of prime real estate investment will require thorough consideration of many factors – your budget, your appetite for risk, your tax needs, and your lifestyle requirements.
Traditional, mature luxury property markets like London and New York have had a tough time of late – while emerging markets in the Middle East and Asia seem to have all the growth impetus.
According to Knight Frank’s prime global cities index prime prices – defined as the top five per cent of the market by value – fell by one per cent in London in the last quarter of 2024 when compared to the same period in 2023.
New York property market trends are only marginally better – prices inched up by 0.3 per cent.
Meanwhile, Dubai luxury real estate growth has been headline grabbing – up 17 per cent in the same period.
High borrowing costs and political instability have been blamed for the travails of London and New York. But price point is also an issue – Dubai’s modern apartments are considerably more accessible than a loft in New York or a mansion flat in London.
The big question here is sustainability.
London and New York lacked significant capital growth over the past decade but both markets appear stable – and falling interest rates could start to improve buyer confidence in 2025 and beyond. Savills’s latest prime residential index predicts that New York is poised to return to the black, with price growth of up to 1.9 per cent in 2025. London could continue to see modest price falls of around two per cent this year before finally returning to see numbers climb again.
Dubai has a history of boom and bust, and a question mark remains about whether its long run of growth – Savills predicts another 9.9 per cent in 2025 – will gently fizzle out into more modest, sustainable growth, or whether the bubble will burst.
New York is the most expensive option for buyers, with average prices standing at $2,590 per sq ft, according to Savills.
Buying luxury property in London is significantly better value with average prices of $1,920 per sq ft.
Your money will go much, much further in Dubai, where property prices stand at $930 per sq ft and demand is being bolstered by a combination of population growth in the UAE and an influx of high net worth individuals and family offices.
Villas remain in very short supply, although the development pipeline is busy in 2025 with a significant number of new homes due to be delivered, which could act as a brake on double digit price growth.
Anyone willing to spend AED2m (around £430,000) on a Dubai apartment can access significant golden visa benefits plus a low tax environment with no personal income, capital, net worth, or withholding taxes.
London has limited tax incentives for overseas buyers now that the long running non dom system – which allowed international residents to pay tax only on money earned in the UK – is being wound up. High net worth individuals can access a residence-based regime. The downside is that it brings foreign earnings into the UK inheritance tax system. Many non doms have voted with their feet and left the country as a result.
In New York, the IRS (Internal Revenue Service) requires foreigners to pay US income taxes on any income earned in or from the United States, and they are also liable for inheritance tax on their US property or properties.
When a foreigner sells a US property they also face capital gains taxes of up to 40.8 per cent – depending on how long they have owned it for. They may also be liable to pay a “mansion tax “of up to 3.9 per cent, depending on the value of the property.
Buying a property through a company may help insulate buyers from these costs, but expert tax advice will be required.
Beaches aside, Dubai has endless fancy bars, restaurants, and boutiques, and very good schools. Authorities have also made concerted efforts to shake off its characterless holiday resort reputation and make it a more interesting place to live in, with heavy investment in amenities like an opera house, art galleries, regular film and food festivals, and sporting events.
On the other hand the weather is insufferably hot in summer, traffic is heavy, and some will still find the ambience soulless compared to global cities like London and New York.
New York is a thrilling place to live, although its mass transit system is barely functional and street crime is a constant fear for locals. On the up side it is exciting, cosmopolitan, with a full cultural life, and world class nightlife.
London also scores highly for vibrancy, diversity, and culture, and its collection of schools and universities are considered the best and most prestigious in the world.
London’s circa 2,000-year history is indisputably richer than New York’s – although both cities have plenty of interesting neighbourhoods to appeal to a wide variety of tastes.
On a more macro level, politically, the UK feels more stable than the USA. Ever since President Trump was elected there has been a stream of American buyers looking for safe haven across the Atlantic, away from gun crime and rampant drug culture.
And while the British climate is a source of endless discontent, its high rainfall and grey days may be preferable to New York’s cycle of heat waves and snow storms.
Enlisting the services of an experienced buying agent means that choosing the city itself is the hardest part.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.
