SYDNEY STACKS UP IN GLOBAL PROPERTY VALUES

SYDNEY has recorded the fourth largest increase in residential property value over the last decade in a list of world cities.

The NSW capital recorded an increase of 137 per cent in capital value growth during the past 10 years, according to Savills 12 Cities Report.

Mumbai came in first at 184 per cent, followed by Shanghai at 173 per cent and Hong Kong at 167 per cent. The average residential growth in all global cities surveyed averaged 73 per cent to the end of 2015.

Head of Savills World Research Yolande Barnes says global financial challenges created an opportunity for real estate in emerging markets, particularly in Asia, to rival western counterparts.

Price growth in new economies averaged 123 per cent between December 2005 and mid-2011, in comparison to just 32 per cent established old world cities.

"Our analysis of occupier demands and rental growth across all sectors 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 cities at the foot of the table, which are enjoying population growth and occupier demand from burgeoning digital and creative industries," Barnes says.

She says while capital growth fortunes reversed after 2011, old world markets grew by an average of 35 per cent to December 2015 while new world markets recorded just 6 per cent.

Despite remaining near the top of the table, the Asian cities may now be more fully valued and susceptible to price falls or stagnation during economic recession.

Those nearest the bottom of the table with the lowest rates of growth were in the high-supply US cities of Miami, LA and Chicago, while Dublin's residential values trailed at -26 per cent.

Savills Australia national head of research Tony Crabb says while the high level of growth is unlikely to be sustained in the long term, Australia's robust population growth and property fundamentals would drive strong performance.

"Australia's population growth is among the strongest in the world and is the strongest in its history," Crabb says.

"This creates ongoing demand for residential property as well as retail goods and services which feeds into logistics, warehousing and manufacturing and ultimately demand for office property and the two cities which will benefit the most from this trend are Sydney and Melbourne.

"As the population of these two cities is set to double over the next 35 years, the key driver of long term growth is in place and that should see Sydney remain near the head of the table in the medium term."