In recent years, the ultrawealthy have been redefining the concept of luxury real estate, seeking not just a residence but a lifestyle and strong investment potential. A new study reveals that one-quarter of American ultra-high-net individuals, with net worths exceeding $30 million, are planning to purchase residential properties this year. The average ultrawealthy individual already possesses four homes, with a quarter of their residential portfolio located outside their home country.
When it comes to the ultrawealthy’s priorities for their next big real estate purchase, “lifestyle” and “investment” dominate the list, followed closely by considerations such as taxes and safety. Despite the challenges faced by the luxury real estate market, including low supply, sluggish sales, and escalating prices, the ultra-high-end segment has shown resilience.
Last year, the U.S. experienced a decline in the number of sales over $50 million, dropping from 45 in 2022 to 34. However, this figure still represents a significant increase compared to the pre-pandemic era. Real estate experts are optimistic about the potential growth in luxury supply, especially with stabilizing interest rates and a possible downward trend this year.
According to the Wealth Report, Miami is expected to lead the U.S. luxury real estate market in price growth this year, with a projected increase of 4%. New York follows closely with an anticipated price growth of 2%, and Los Angeles with 1% growth. Globally, Auckland, New Zealand, is poised to be the top-performing luxury real estate market, with projected price growth of 10% in 2024.
When it comes to global luxury real estate markets, Manila, Philippines, emerged as the best-performing market last year, boasting a notable 26% growth in prices. Dubai followed closely with a 16% price surge, with the Bahamas and the Algarve region in Portugal also posting impressive gains. On the other end of the spectrum, New York experienced a 2% decline in prices, alongside San Francisco, which remained relatively stagnant with a mere 0.5% growth.
The report highlights a growing trend among ultrawealthy American buyers who are increasingly exploring international real estate opportunities. U.S. buyers are now leading foreign purchasers of ultraprime London properties priced above $10 million and are expanding their presence in Europe, particularly in Italy, France, and Portugal. Despite the rising costs of luxury real estate, ultrawealthy individuals are keen on diversifying their real estate portfolios globally.
As the cost of luxury real estate continues to soar, the value per square foot varies significantly across different regions. In cities like Aspen and Hong Kong, $1 million buys a minimal amount of space compared to the more spacious options available in New York. The ultrawealthy are recalibrating their perceptions of value and actively seeking opportunities that offer both opulence and long-term investment potential.
The ultrawealthy’s insatiable appetite for luxury real estate transcends mere property ownership, signaling a shift towards lifestyle-enhancing investments with global appeal. As market trends fluctuate and global dynamics evolve, ultrawealthy individuals remain at the forefront of reshaping the luxury real estate landscape, seeking exclusivity, prestige, and enduring value in their property acquisitions.
Leave a Reply