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Manila overtakes first class cities such as Paris, Boston, and San Francisco as the world's best market for luxury homes in 2018. According to the Prime International Research Index (PIRI), the country's capital claimed the top spot due to an 11 percent increase in prices the previous year.

The Wealth Report ranks cities annually by measuring their market price increase. Manila is closely tailed by key cities like Edinburgh (10.6%), Berlin (10.5%), Munich (10.0%), Buenos Aires (10.1%), and Mexico City (9.5%). Other than Manila, the only Asian city that made it to the top 10 is Singapore with 9.5% increase in prices.

The 11% price increase in Manila is speculated to spring from a 6% growth in the annual GDP and the lack of supply of luxury homes in the country, as local developers have been focusing more on building affordable housing which is more in demand and needed in the Philippines. Moreover, the increased demand from wealthy foreigners who are opting to live in the city have also contributed to the increase in prices.

However, Manila's luxury home market has drawn over 6.5 billion pesos (US$ 125.1 million) worth of investments, a dip from 10 billion pesos in 2017 (35%). While the city dominated the latest rundown, this percentage rise was still considerably lower than previous top performing markets. In 2017, Guangzhou topped the list with 27% increase in prices, while Vancouver took the lead in 2016 with 24.5% price increase. Similar to previous years, the numbers were achieved by the declining supply globally, among other factors.

The PRI index witnessed its lowest rate of annual growth since 2012 with prices rising on average by 1.3%. The slower growth in luxury home prices was attributed to the end of the ultra-low interest rates era that began boosting real estate markets globally in 2008.

Why Luxury Real Estate is a great investment

Luxury Real Estate remains to be one of the fastest growing real estate asset class. Following the recession, the rest of the real estate market are still slowly recovering, but not the high-end properties. In fact, it is enjoying a steady growth over the years.

Fastest Growing Real Estate Asset Class

While the rest of the real estate market slowly climbs out of the recession, the luxury residential real estate market has been enjoying steady growth. In fact, according to the 2015 Wealth X report, luxury real estate has grown 2% faster than the rest of the market. The same report has cited that this increase sprouted from the need to own a primary or secondary residence that can be both practical and financially responsible.

Moreover, this real estate niche is still expecting to grow more and retain its steady pace in the succeeding years. More investors opt to buy and invest in luxury real estate and driving up the demand for properties. This is spurring more development and driving the prices of current up due to an overall shortage of supply.