Waterfront property in Sydney commands the highest price premium out of eight global cities analysed in Knight Frank’s 2023 Waterfront Homes report.

The city has retained the top spot in Knight Frank’s Global Waterfront Index from last year, with a waterfront property generating a 118% premium on average in 2023, down only marginally from 121% in 2022.

The Global Waterfront Index measures the potential value uplift for prime homes on the water’s edge or absolute waterfront, compared with similar properties located further inland without access to, or a view of, water.

Sydney’s waterfront premium is more than double the city sitting in second place in this year’s rankings, with a waterfront home in Auckland commanding a 58% premium.

European destinations including Monaco (42%), Cap D’Antibes (40%) and Paris (38%) complete the top five.

Geneva (35%) comes in next, followed by Vienna (15%) and Hong Kong (12%).

The average premium of a waterfront property across the eight global markets was 45%.

When it comes to the type of waterfront, the Knight Frank research found beachfront homes have the biggest uplift overall, and have extended their lead since last year, with these homes enjoying a 76% premium, up from 63% in 2022.

Harbour homes were next, commanding a 61% premium, followed by riverside (39%), coastal (36%) and lake (35%).

Premiums for riverside locations have swelled over the past 12 months, rising from 29% to 39%.

Knight Frank Head of Residential Research Michelle Ciesielski said the scale of the uplift in waterfront premiums was attributable to supply and demand, with demand well outstripping supply.

“Frontline water access is a rarity in cities and protected areas of outstanding natural beauty,” she said.

“In Sydney, there is an ongoing immense shortage of prestige homes being listed for sale across Sydney prime regions, including on the waterfront, with many still selling off-market and before any form of marketing takes place,” she said.

“There are only a handful of new projects in Sydney under construction which enjoy a water view of the Sydney Harbour Bridge and Opera House, but even less with an absolute waterfront.

“Tight building restrictions will limit the availability of waterfront stock, whilst on the demand side, investors vie for such homes alongside second home purchasers, given their rentability as holiday lets and above-average occupancy levels.

“After an extended stint working overseas and often priced out of owning a home at the top-end of the market in key global cities like London, New York and Hong Kong, many expats buying in Sydney are holding off to buy on the waterfront with many attracted to the lifestyle which comes with waterfront living such as private maritime facilities on their eventual return to the city.”

Ms Ciesielski said with rarity of waterfront home transactions comes resilience in terms of property prices for both standalone houses and apartments.

“Looking at Crown Residences at One Barangaroo, located on the iconic Sydney Harbour, has made up 79% of Sydney’s total super-prime CBD apartment sales since March 2021,” she said.

“The desirability of waterfront homes and the potential they offer as an inflation hedge alongside capital preservation is likely to see demand swell further given the current economic backdrop.”