Highlights:

• Knight Frank envisages that government-imposed regulatory measures will keep a lid on prime residential price growth in Asia in 2013 but the west-east shift in the economic balance of power suggests more promising prospects in the medium term.
• We expect prime residential prices across the 14 cities included in our forecast to rise by 2.5% on average, with Moscow, Miami and Dubai being the strongest performers.
• A sharp slowdown in the global economy is the highest risk for the world’s prime residential markets closely followed by government cooling measures.
• However, the current economic uncertainty is also considered a key driver of demand in prime cities as HNWIs seek the shelter of "safe-haven" investments.
• Supply, or the lack of it, will be a key determinant of price performance in cities such as New York, Moscow and Miami in 2013.

According to Knight Frank’s latest Prime Global Residential Forecast, with the ongoing global west-east shift in the economic balance of power, there is no doubt that the prospects in the medium term for prime residential markets in the region are promising. Nicholas Holt, Research Director, Asia Pacific at Knight Frank, says "however, given the protectionist measures introduced over the last 12 months in the Asian safe haven of Singapore and Hong Kong, we expect fairly subdued price performances in these markets through 2013."

"In China, we are more bullish about the stronger domestic 'establishment' market of Beijing than the Shanghai market, which is more linked to the business performance of the financial capital of the country," Nicholas continues. "Sydney, which is closed-off to foreign buyers except in the primary market, is expected to recover after a decrease in the number of motivated vendors with a stable market forecast for 2013."

Meanwhile, Kate Everett-Allen of International Residential Research at Knight Frank predicts the global trends in 2013. She expects wealth creation, the growth of “safe-haven” investments and the widening gap between East and West will continue to be increasingly influential on the world’s luxury residential markets in 2013, but currency movements will have an increasing bearing on the flow of wealth from city to city.

While international locations such as Geneva, Monaco, Dubai and Hong Kong rank the slowing global economy as the biggest risk, there are more insular concerns surrounding the health of domestic economies in the growth cities of Kuala Lumpur, Mumbai, Ho Chi Minh City and Sydney.

Shanghai meanwhile is set to see a continuation of the home purchase restrictions that came into force this year. This includes preventing single persons that are non-resident from buying property in the city.

"Barring a collapse of the euro, the US toppling off its fiscal cliff or Asian protectionism being ramped up, the outlook for luxury homes in the world’s key cities is one of quiet optimism," Kate concludes.