Luxury real estate prices in Europe have experienced a notable increase in 2025, with the Czech capital Prague leading the list of European cities with a rise of 14.6%, according to the Knight Frank Wealth Report 2026. Meanwhile, London recorded the largest price drop of 4.7%, reflecting significant shifts in the luxury real estate market.
Knight Frank tracks luxury real estate prices in approximately 100 cities worldwide, revealing that more than half of the European cities monitored saw annual price increases exceeding 3% in 2025. Luxury properties are typically the most sought after and highest priced in every market, often representing 5% of the highest values in each area.
Event Details
Prague topped the list with a remarkable increase, followed by the French city of Méribel, which saw a rise of 9%. The Portuguese city of Porto achieved an increase of 8.5%, while the Spanish city of Marbella recorded an increase of 8.1%. The French resort of Courchevel 1850 experienced a rise of 6.9%, and Florence and Lake Como in Italy saw increases of 6.7% and 6.5%, respectively.
Other cities such as Gstaad in Switzerland, Rome in Italy, and Quinta do Lago in Portugal also recorded increases exceeding 5%. Despite these increases, not all European cities experienced growth, as London faced the largest price drop, reflecting changes in tax laws affecting its wealthy residents.
Background & Context
Historically, luxury real estate markets in Europe have undergone significant fluctuations, directly influenced by economic and political factors. In recent years, many European cities have seen a rise in demand for luxury properties, leading to price increases. However, major cities like London and Paris are facing challenges related to taxes and government policies that impact purchasing decisions.
Prague is among the cities that have benefited from this trend, becoming a preferred destination for foreign investors. With its historical beauty and rich culture, Prague continues to attract buyers from around the world, contributing to the rise in luxury property prices.
Impact & Consequences
Reports indicate that the demand for luxury real estate in Europe remains strong, as the wealthy prefer to invest in luxury properties as a means of preserving their wealth. However, economic challenges such as rising borrowing costs may affect the market overall. While luxury properties tend to be more resilient against economic fluctuations, traditional markets may face greater pressures.
At the same time, experts suggest that tourist cities and resorts remain the most attractive to investors, as these destinations continue to achieve notable price increases. This trend may create new opportunities for investors but could also exacerbate the housing crisis in some areas.
Regional Significance
The luxury real estate markets in Europe serve as an important indicator for Arab investors, many of whom seek to invest in European properties as part of diversification strategies. With the increasing demand for luxury properties in Prague and other cities, Arab investors may turn to these markets to capitalize on available opportunities.
In conclusion, the rise in luxury real estate prices in Europe signals the strength of the market but also raises questions about sustainability and potential impacts on other markets. Investors must closely monitor these trends to ensure informed investment decisions.