The port of Fontvieille in the Principality of Monaco.
Educational images | Universal Images Group | Getty Images
The super-rich are looking for a better lifestyle and strong investments when buying their next home, according to a new study.
According to the Wealth Report by Douglas Elliman and Knight Frank, a quarter of U.S. ultra-high net individuals, or those with assets of $30 million or more, plan to purchase a residential property this year. According to the report, the average ultra-high net worth individual already owns four homes. A quarter of their residential portfolio is outside their home country.
When it comes to priorities for the next big purchase, “lifestyle” and “investment” are at the top of the list for the super-rich, followed by taxes and security.
Sign up to receive future editions of CNBC’s Inside Wealth newsletter with Robert Frank.
While luxury real estate has faced many of the same pressures as the rest of the market – low supply, slow sales, rising prices – the ultra-high end has fared slightly better. Last year there were 34 sales over $50 million in the U.S., down from 45 in 2022 but still a significant increase from pre-pandemic years.
As interest rates stabilize and possibly fall this year, real estate experts say there are early signs that the supply of luxury items is increasing, which could lead to more sales.
“If we see a shift towards lower interest rates or at least more confidence that inflation is heading in the right direction, I think inventories will start to build back up,” said Liam Bailey, partner and global head of research at Knight Frank.
The report predicts that Miami will be the best-performing U.S. luxury market, with an expected increase of 4% this year. New York ranked second in the U.S. with expected price growth of 2%, followed by Los Angeles with 1% growth.
The world’s leading luxury real estate market is expected to be Auckland, New Zealand, with forecast price growth of 10% in 2024. Mumbai is second at 5.5%; followed by Dubai (5%); Madrid (5%); Sydney (5%); and Stockholm (4.5%).
Cars drive down a street in front of high-rise buildings in Dubai on February 18, 2023. In 2022, Dubai recorded record real estate transactions, largely due to the influx of wealthy investors, particularly from Russia.
Karim Sahib | Afp | Getty Images
Last year, the world’s 100 largest luxury real estate markets saw a solid 3% increase in average price. The world’s best-performing luxury real estate market was Manila in the Philippines, with growth of 26%, partly due to investors fleeing Hong Kong and China. Dubai came in second with price growth of 16%, followed by the Bahamas at 15% and the Algarve region of Portugal at 12%.
Last year’s worst performers included New York, with a price decline of 2%, and San Francisco, where the price was essentially flat at 0.5%. The largest global decline among major markets was Oxford in the UK, down 8%.
Bailey said ultra-wealthy American buyers are increasingly venturing abroad. He said US buyers are now the leading foreign buyers of prime London properties – those priced at over $10 million. They are also increasingly active in Europe.
“They have developed quite a large presence and are now much more visible than before, particularly in Italy, France and Portugal,” Bailey said. “I think American buyers have become much more comfortable exploring and thinking about alternatives.”
Still, a million dollars can no longer buy what used to be common in the United States and abroad. In Monaco, the most expensive real estate market in the world, $1 million buys you 172 square meters of prime real estate, according to Wealth Report. In Aspen you get 215 square feet, while in Hong Kong you get 237 square feet, making New York seem like a bargain at 367 square feet.
Don’t miss these stories from CNBC PRO:
Source link
2024-03-01 21:37:06
www.cnbc.com
