The hotspot cycle

The idea that property goes up is a memory of the last thirty years in a few places. Prime markets have cycles like everything else, and the cycles differ: some hotspots fall by nearly half and recover, some move sideways for a decade, and a few have not fallen in the memory of anyone selling them. A buyer who knows which kind of market they are in buys differently.

Three kinds of cycle

The trading markets

Dubai, Marbella, Miami, the Algarve. Deep, liquid, driven by new buyers and new building, and volatile. Dubai fell forty per cent in 2009 and again between 2015 and 2019, then doubled. Marbella lost a third after 2008 and took a decade to recover. These markets reward buyers who buy after the fall and can hold through the next one.

The sideways markets

London and, for a decade, Paris. Deep and liquid but heavily taxed and exposed to politics and currency. Prime London went nowhere in real terms from 2014 to 2024, which made it cheaper for a foreign buyer in 2026 than in 2014. Sideways markets reward patience and a long horizon; they punish leverage.

The closed markets

Zürich, St. Moritz, the capes of the Riviera, Como, Sylt, Kitzbühel. Scarce by law or geography, owned by people who do not need to sell, and barely traded. They fall little, recover first and reward the buyers who get in at all.

What moves the top

Money

The arrival of a new class of buyer: Americans in Europe since 2022, finance in Miami since 2020, the world in Dubai since 2020. It moves the trading markets fastest

Tax

A change to the door or the exit: stamp duty in London after 2014, the visa changes in Iberia. It moves the sideways markets

Law

A new fence: the Swiss second-home initiative, the Tyrolean residence rule, the Balearic licence freeze. It closes a market and lifts what is inside

Currency

The franc since 2008, the pound since 2016, the dollar since 2022. It moves the foreign buyer's price without moving the local one

Where the cycle is now

The desk's reading at the index date, and it is a reading rather than a forecast. The trading markets have had five extraordinary years and are priced for more; Dubai in particular is at a level where a buyer should model the fall before the rise. The sideways markets are cheap for foreign money and waiting for a reason; London's reason may be the pound rather than the politics. The closed markets are where they always are: expensive, scarce and quiet, with the best houses moving by introduction at prices that are not confirmed.

Buy the closed markets whenever you can, the sideways markets when the currency helps, and the trading markets after they have fallen. Then hold all three for longer than feels comfortable.

The desk's rule of the cycle

Buying through it

Decide which kind of market you are in before you decide the house. The yield instrument with a thirty per cent fall in the sale price is the honest test for a trading market.
Leverage in the closed markets, where the asset does not fall; cash in the trading markets, where it does.
Hold through the low. Every buyer who sold a Marbella villa in 2012 or a Dubai villa in 2019 sold to somebody who did better.
Watch the fences. A law that stops building is worth more to an owner than a year of growth.

Run the numbers

Yield & Return

Gross yield, net yield, cash-on-cash and the total return over your holding period.

Open the instrument