Recent studies have shown that ultra-high-net-worth individuals in America are prioritizing a better lifestyle and strong investment opportunities when it comes to their next real estate purchase. These individuals, worth $30 million or more, are looking to buy residential properties this year. The average ultra-high-net-worth individual already owns four homes, with one-quarter of their residential portfolio located outside their home country.
Luxury real estate, while facing similar challenges as the overall market such as low supply and rising prices, has fared relatively better. Last year saw a decrease in sales over $50 million in the U.S., but the numbers were still significantly higher than pre-pandemic years. With interest rates stabilizing and possibly falling this year, experts believe that there may be a growth in luxury supply, leading to increased sales.
Forecasted Markets
The Douglas Elliman and Knight Frank Wealth Report forecasts Miami as the best-performing luxury market in the U.S. this year, with an expected price growth of 4%. New York follows with a projected 2% growth, while Los Angeles is expected to see a 1% increase. Globally, Auckland, New Zealand is set to be the top market for luxury real estate, with a projected price growth of 10% in 2024.
In the previous year, the top 100 luxury real estate markets worldwide experienced an average price increase of 3%. The highest-performing luxury market was Manila, Philippines, with a significant 26% growth. Conversely, New York saw a decrease in prices by 2%, with San Francisco remaining almost flat at 0.5%. The biggest decline among prime markets globally was in Oxford, U.K., with a decrease of 8%.
International Ventures
Ultrawealthy American buyers are increasingly looking at opportunities overseas. U.S. buyers are now the primary foreign purchasers of ultraprime properties in London priced above $10 million. There is also a growing presence of American buyers in European markets such as Italy, France, and Portugal, signaling a shift towards exploring alternative options.
Changing Perceptions of Value
The concept of value has shifted in luxury real estate, where $1 million may not fetch the same square footage as it used to. In cities like Aspen and Hong Kong, $1 million gets you significantly less square footage compared to New York. This trend highlights the changing dynamics of luxury real estate markets and the evolving perceptions of value among buyers.
The luxury real estate landscape in 2024 is witnessing a transformation driven by evolving priorities, market trends, and international influences. As ultrawealthy individuals seek out lifestyle enhancements and investment opportunities, the dynamics of luxury real estate markets continue to evolve, presenting new opportunities and challenges for buyers and sellers alike.
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