Port of Fontville in the Principality of Monaco.
Education Pictures | Global Photo Collection | Getty Images
A new study reveals that wealthy people are looking for a better lifestyle and a solid investment when it comes to buying their next home.
A quarter of U.S. high-net-worth individuals, or those with wealth of $30 million or more, plan to purchase a residential property this year, according to a wealth report released by Douglas Elliman and Knight Frank. According to the report, the average ultra-high net worth individual already owns four homes. A quarter of their housing portfolio is outside their home country.
When it comes to priorities for their next big purchases, the wealthy ranked “lifestyle” and “investment” at the top of the list, followed by taxes and safety.
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While luxury properties have been under many of the same pressures as the rest of the market — low supply, slow sales, and rising prices — luxury properties have fared slightly better. Last year in the U.S., there were 34 sales worth more than $50 million, down from 45 in 2022, but still well above pre-pandemic years.
With interest rates stabilizing and possibly falling this year, real estate experts say there are early signs that the supply of luxury goods may be growing, which could lead to more sales.
“If we see a shift towards lower interest rates, or at least more confidence that inflation is going in the right direction, then I think we will start to see stocks build up again,” said Liam Bailey, partner and global head of research at Knight. sincere.
The report predicts that the best-performing US luxury market this year in terms of price growth will be Miami, with an expected increase of 4%, according to the report. New York ranked second in the United States, with an expected price growth of 2%, followed by Los Angeles, with a growth rate of 1%.
Globally, Auckland, New Zealand, is expected to be the largest market for luxury real estate, with an expected price growth of 10% in 2024. Mumbai ranks second at 5.5%; followed by Dubai (5%); Madrid (5%); Sydney (5%); and Stockholm (4.5%).
Cars drive along a street in front of high-rise buildings in Dubai, on February 18, 2023. Dubai saw record real estate transactions in 2022, largely due to an influx of wealthy investors, especially from Russia.
Karim Sahib | AFP | Getty Images
Last year, the world's 100 largest luxury real estate markets recorded strong gains of 3% on average prices. The world's best-performing luxury real estate market was Manila, Philippines, with 26% growth, driven in part by investors fleeing Hong Kong and China. Dubai came in second place, with a price growth rate of 16%, followed by the Bahamas by 15%, and the Algarve region in Portugal by 12%.
Among the worst performers last year were New York, where prices fell 2%, and San Francisco, which was essentially flat at 0.5%. The largest decline in the world among major markets was Oxford, in the United Kingdom, where it fell by 8%.
Wealthy American buyers are increasingly venturing abroad, Bailey said. He said American buyers are now the main foreign buyers of luxury properties in London, which are priced at more than $10 million. They are also increasingly active in Europe.
“They have become a very large presence, and they are more noticeable now in Italy, France and Portugal than they were before,” Bailey said. “I think American buyers are becoming happier to explore and consider alternatives.”
However, a million dollars is not enough to buy what he is used to in the United States and abroad. In Monaco, the world's most expensive real estate market, $1 million gets you 172 square feet of luxury real estate, according to the Wealth Report. In Aspen, you get 215 square feet, while in Hong Kong, you get 237 square feet, making New York look like a bargain with 367 square feet.
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