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According to Douglas Elliman and Knight Frank’s latest research, global super-prime (US$10m+) residential sales grew by 11% in Q1 2023 compared to the previous quarter, with 417 sales taking place across 12 key markets tracked. The strongest market for sales at this level of the market in Q1 this year was Dubai with 88 sales taking place, followed by Hong Kong (67), New York (58), Los Angeles (46) and Singapore (37). London comes mid-table with 36 transactions taking place above US$10m over the period.
While volumes rose in Q1, this activity represented US$7.2 billion worth of super-prime sales, down 4% on the previous quarter. The most expensive average super-prime sales took place in Geneva at $23.8m and London ($20.4m).
“Super-prime residential property has retained its attraction for wealthy buyers despite huge economic headwinds,” said Liam Bailey, global head of research at Knight Frank. “The data for the first quarter of this year confirms an ongoing desire for new $10m+ purchases at a time when markets were clouded by peak uncertainty around global inflation and interest rates. The latest figures also point to the rise of Dubai as a critical part of the global super-prime landscape, as well as the centrality of New York, Los Angeles, London, Singapore, and Hong Kong for the world’s wealthy.”
“The Douglas Elliman | Knight Frank Global Super-Prime Intelligence Q1 2023 report tracks with our firm’s own sales activity where we are seeing significant upticks in sales across New York City,” said Scott Durkin, President and CEO of Douglas Elliman Realty. “This is especially true in the upper end of the market where savvy buyers and ultra-high-net worth individuals are not restricted by higher interest rates.”
Annual Results
Annualized $10m+ sales slowed noticeably over recent quarters as global housing markets were hit by roiling interest rate rises. The 1,645 sales across the 12 markets tracked in the 12-months to the end of March 2023, was down 28.4% from a recent peak of 2,298 sales in the year to the end of December 2021.
On an annualized basis Dubai tops the list of sales markets with 274 sales, followed by London (233), New York (219) and Los Angeles (210). While this is down 26% on the $40.7bn reached at the height of the pandemic property boom during full-year 2021, it remains 62% above the pre-pandemic level in full-year 2019.
New Hubs
In 2019 Dubai accounted for 2% of all super-prime sales across the 12 markets analyzed, but by the most recent 12-month period this share had increased to 17%. Second placed London managed 14%.
Dubai’s sales activity has helped propel prime prices there higher by 149% since the beginning of 2020 well ahead of the numbers seen in comparable markets. The second strongest prime market for price growth, Miami, saw 59% growth over the same period.
While sales volumes have held up relatively well, despite pressures from higher debt costs, one issue holding back transactions in recent months has been limited stock availability. Markets like Geneva and Paris in particular struggle with a lack of development opportunities despite strong demand form UHNW buyers. Covid restrictions in Hong Kong resulted in delays to new project launches, which weighed on sales volumes. However, with more new development starts, volumes should pick up from here.
New York has maintained a stronger development pipeline over recent quarters compared to many markets – which has aided activity. Miami’s three year long market boom has led to a lack of availability leading to a surge in off-plan sales – meaning that a high proportion of development properties slated for delivery in 2024 and beyond have already been purchased.
Cross border demand continues to support markets. Notable trends include a rise in demand for Swiss super-prime property from Scandinavia, with Norway’s wealth tax cited as a particular diver. London and Paris have highly diverse markets which were boosted by the arrival of more Asian, Middle East and US buyers in 2022 and Q1 this year as travel normalised following the pandemic. Hong Kong’s delayed covid reopening saw a notable uptick in Mainland Chinese buyers which largely explained the surge in Q1 sales.
Taxation is having a significant impact on buyer behaviour. To attract international investors, Hong Kong has recently changed the stamp duty rules to allow refunds on their 30% stamp duty after living in the property for seven years, and therefore becoming eligible for permanent residency. Some markets are making it more expensive for foreign buyers to enter the market – with Australia’s foreign investor fees doubling in 2022, and Singapore’s recently announced increase in foreign buyer stamp duty to 60% set to impact on demand in future quarters.
Outlook
The global super-prime market remains a rarefied sector, but is a useful bellwether for global movements in wealth and investment. Our latest data confirms the arrival of Dubai as a key market for the world’s wealthy, but also points to the ongoing centrality of London, New York and Los Angeles , and the continued pull of Miami, Singapore and Hong Kong for regional wealth.
“The data from our survey shows how best-in-class property continues to resonate with our clients globally,” said Paddy Dring, head of Knight Frank’s Private Office. “The market is more challenging and buyers are more informed than ever – so vendors need to be realistic when setting pricing even at the top of the market.”
The expectation is that 2023 will see more subdued conditions compared to the recent 2021 peak, with transactions likely to total $25-27 billion for the full year. However, the recovery in growth in the global economy later this year will aid transactions in 2024 with a return to $30 billion+ sales.
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