- Top 5-10%: The percentage of luxury real estate listings in inventories globally
- Starting price of luxury real estate in New York City is $4-5 million
- House price growth in 2022 was 8.8%
- The real estate market will be worth $5.85 trillion by 2030
- 5,2%: The CAGR of the real estate market from 2022 – 2030
- Luxury real estate sales in the US dropped 41,6% in 2022
- Florida’s most expensive listing in 2021 was 25,754% over the average price
- Miami luxury real estate increased in price by 101,1% between 2020 – 2021
- Luxury real estate in Dubai in 2023 is expected to incur a 13,5% price increase
Despite the prolonged disruption from COVID-19 and the huge shifts in the way we live and work since 2020, luxury real estate continues to attract buyers and investors. This makes luxury real estate a highly sought-after asset.
If you’re interested in learning more about the luxury real estate market, take a look at the top trends, stats, figures and facts for 2022 and 2023.
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Year Of A Booming Market
Even in 2021, in the middle of the pandemic and economic stress, global luxury real estate experienced a booming year with high sales globally. This was driven by high global demand for residential and industrial real estate as well as good yields and stable interest rates. In no time, the demand outstripped the supply.
But in the last two quarters of 2022, macroeconomic woes in the form of recessions, higher energy prices and rising interest rates caused extreme uncertainty and caution among investors. By the end of 2022, inflationary pressure had risen to unprecedented levels － the fastest annual rise in 40 years.
In the US, inflation stood at 7.7% by the end of 2022, while the EU figure was in the double digits, at 11,1%.
Interest Rates Bites
Following a clearly evident slowing down in sales volumes in late mid-to-late 2022 due to banks raising interest rates, analysts predict that the luxury real estate market will slow and may only experience a turnaround in late 2023.
But market watchers are viewing this slowdown more as a normalisation than an outright crash.
According to British real estate consultancy Knight Frank, house price growth for luxury real estate declined to 8.8% in 2022, down from 10,9% at its peak in late 2021.
For example, London luxury real estate prices are expected to dip by 3% in 2023 according to Knight Frank. But a weaker pound could mean that foreign investors from the US, Middle East and Asia could move in on London’s prime central area.
Top Cities For Luxury Real Estate
In the US the following cities top the luxury real estate charts:
- Nashville
- Raleigh/Durham
- Phoenix
- Austin
- Tampa/St Petersburg,
- Miami, Charlotte
- Dallas/Fort Worth
- Atlanta
- Seattle
- Boston
In Europe, sought-after cities include: London, Berlin, Paris, Frankfurt, Munich, Madrid, Amsterdam, Hamburg, Barcelona and Brussels.
In the Asia Pacific region, cities favoured for luxury real estate include:
- Tokyo
- Singapore
- Sydney
- Melbourne
- Seoul
- Osaka
- Shanghai
- Ho Chi Minh City
- Shenzhen
- Guangzhou
Slow downs have been reported from most cities on the luxury real estate map with the exception of Dubai in the UAE, with its continued influx of millionaires and the ultra-wealthy.
So what’s happening in the US and North America?
US Luxury Real Estate Market
Across the Atlantic in the US, Texas comes out tops in the luxury real estate market. In fact, the Texas luxury market is described as a unicorn.
Real estate news site, Candy’s Dirt provides some very interesting facts and figures on the luxury real estate market in the US.
Most of the top luxury real estate principals interviewed were anticipating another bumper year in 2023 and emphasised that the Lone Star State still had lots to offer wealthy outsiders considering moving in.
Asia Pacific Rim
Turning to the Asia Pacific region, market watchers also predict the region to show record growth in 2023. Private wealth investors from Asia will become more active, cites an industry research report.
This continued growth will be sustained by lower inflation and more robust GDP drivers in the region, characterised by a growing middle class and increasing incomes.
Overall Luxury Real Estate Trends
The global real estate market size is expected to reach $ 5.85 trillion by 2030, registering a healthy CAGR of 5.2% from 2022 to 2030. Rapid economic expansion in developing countries in the East such as India, China, and several African countries has increased income levels.
Even though the housing market experienced major growth in the last two years, luxury real estate surpassed the lower sections of the market. The number of days on the market for a luxury home listing dropped from 38 in February 2021 to 11 in 2022, said one report.
Globally it is a seller’s market with stand-alone luxury family homes selling a third of the time in 2022, compared to the previous year.
The reason cited for this growth is that the US has a relatively stable labour or job market with many now working remotely. People in the US experienced lower mortgage rates. This resulted in an increase in luxury real estate sales up to 41,6%. This phenomenal increase out-stripped that of mid-priced real estate (5,9%) in 2021 and affordable homes (7%).
Size Matters Regionally
The old adage that you can buy a disused estate in Scotland for the price of a central London flat rings true for other regions, particularly in the US.
The size of an average family luxury home was around 3,335 square feet in January 2022. Yet location matters. Removing amenities and the bells and whistles, buyers can double or treble their real estate footprint in Miami.
In New York City, $1 million will get you 366 square feet, while in Miami, the same price will give you almost 1,000 square feet.
The following statistics illustrate how location affects asking prices. A luxury home on the Greek island of Mykonos will cost you €840 per square foot. On the sunny French Riviera, luxury real estate is priced at around €3.53 thousand a square foot. Prime real estate in London’s Mayfair district will set you back €4.47 thousand euros per square foot.
During Covid in the US, many residents flocked to less dense areas with many cities experiencing a marked uptick in sales and prices of high-end properties. Luxury properties are cheaper in the South and West compared to the East Coast and California.
Florida’s most expensive listing (2021) was a whopping 25,754% more expensive than the average price. Miami luxury real estate increased by 101.1% from 2020 to 2021.
Another factor is that Texas and Florida have no income tax. So, living in these states has marked tax benefits. Also, construction costs are lower in the south.
Scarcity is an additional factor. Pristine Hawaii remains a sought-after area for opulent and exclusive properties.
In conclusion, look at the following figures on the number of homes owned by the wealthy.
The number of homes owned by the ultra-wealthy in Europe is 3,35. Middle Eastern ultra-high-net individuals owned 4.6 homes.
Dubai and Miami top the list of best luxury real estate markets globally.
Dubai holds first place and prices are predicted to increase by 13.5% in 2023. Florida’s Miami is second, where prices are expected to rise by 5%.
Dublin, Lisbon and Los Angeles followed, with expected increases of 4%.
While analysts predict a slight slow down in the luxury real estate market in 2023, it appears that some prime locations will see prices only increasing.
Nathan has always been captivated by numbers and patterns. With a Master’s degree in Statistics, he’s honed his skills to decipher complex data sets and discern market trends.
Over the past decade, Nathan has worked with various firms compiling and analyzing industry spending figures to forecast market movements.