The world’s luxury real estate market is showing an upward correction as global stock markets surged in early 2017 and political uncertainties slowly clarified.
Prices of million-dollar-plus homes increased by approximately 2 percent across the globe in 2016, according to Luxury Defined, a whitepaper by Christie’s International Real Estate (CIRE) released this month.
The report revealed a number of insights related to local and international luxury markets, including which cities experienced a luxury boost, withdrawal or made the list of hottest high-end real estate locales for the first time, along with juicy trends that modern wealthy buyers are currently gravitating toward.
Hong Kong unseats London
CIRE’s Luxury Index, which evaluates a market’s overall prices and relative luxuriousness, revealed Hong Kong as the world’s top ranking city for luxury real estate, unseating London for the first time, while New York came in third place. Their top 10 list for the Luxury Index was as follows:
1. Hong Kong
2. London
3. New York
4. Los Angeles
5. Singapore
6. Sydney
7. San Francisco
8. Paris
9. Toronto
10. Miami
Miami experienced a slight decline, dropping from seventh place to 10th due to a decrease in sales activity, an influx of new development condos and a sharp rise in inventory supply.
The market in South Florida is seeing well-priced properties sell successfully, but price reductions are becoming more commonplace, according to the report.
Moving up in the world were San Francisco in seventh place and Toronto in ninth.
Buyer movement post-election
The most important driver for luxury homebuyers and sellers during unsettling periods is the return of consumer confidence and the perception of stability, the report noted.
According to a survey of more than 200 global luxury agents of the CIRE network, 21 percent reported that the election outcome had resulted in increased sales.
“Nearly half of the high net worth individuals in our market were sidelining cash until the election was over,” said Kevin M. Leonard of Illustrated Properties in Palm Beach Gardens, Florida. “We are now seeing that cash being injected into the luxury real estate market.”
Hall Wilkie of Brown Harris Stevens in New York noted that national elections temporarily weakened Manhattan’s property market, and the impact was exacerbated with million-dollar-plus sales dropping by 3 percent annually.
The drop was worse at the higher end, with an 8 percent decline in sales over $10 million.
Things seem to be looking up, however.
According to the CIRE’s research, in Manhattan, the number of contracts signed for properties over $5 million were up by 28 percent in January and by 43 percent in February.
U.S. cities’ performance in hottest global markets
CIRE’s report also offers up its Luxury Thermometer rankings for the first time, which take both growth and demand into consideration to pinpoint the hottest real estate luxury markets:
1. Toronto
2. Victoria, British Columbia
3. San Francisco
4. Austin, Texas
5. Charleston, South Carolina
6. Auckland
7. Paris
8. Portland, Oregon
9. Sydney
10. San Diego
Toronto claimed the top place with almost double the number of million-dollar-plus sales recorded than the previous year, followed by Victoria, British Columbia.
Toronto (Source: Christie’s International Real Estate Luxury Defined Whitepaper)
San Francisco came in third and, making it to the Luxury Thermometer for the first time, Austin, Texas, ranked fourth; followed by Charleston, South Carolina.
Victoria, British Columbia (Source: Christie’s International Real Estate Luxury Defined Whitepaper)
Charleston is benefiting from a buoyant local economy and an influx of millennial buyers at the entry-level luxury price point, with strong growth in sales and prices in 2016, the report said.
Portland, Oregon, was ranked no. 8, and San Diego earned a spot at no. 10 for the first time.
Portland, Oregon (Source: Christie’s International Real Estate Luxury Defined Whitepaper)
Markets to watch (that didn’t quite hit that Luxury Thermometer level) included Washington, D.C., which saw an upswing in million-dollar-plus home sales during 2016 (7 percent), and the Lake Tahoe Region (12 percent).
“Arlington, Virginia, right across the Potomac from the District is particularly attractive to affluent millennial buyers,” said Jeffrey S. Detwiler, president and COO of The Long & Foster Companies.
“I’ve seen reports where Arlington ranks no. 1 in the United States in this demographic, edging out well-known tech hubs.”
Luxury home trends: Recreation, kitchens and size
The report also flagged the latest luxury home trends worldwide.
Having art in the home is a major priority for wealthy homeowners, regardless of whether or not it is displayed in a dedicated space or integrated into the home’s primary living areas.
The affluent also view the kitchen as a “theater” of sorts, while counter space is considered “prime real estate,” even more so than stoves or appliances.
Guests want to watch their hosts in action and congregate in the kitchen to chat and watch them prepare.
Charleston, South Carolina (Source: Christie’s International Real Estate Luxury Defined Whitepaper)
In addition, more elaborate farm-to-table garden options in luxury households are taking root, said the report, with elaborate indoor herb gardens adding to the mix.
According to Helen Geer from South Carolina affiliate William Means Real Estate, the importance of a kitchen in selling a home cannot be understated:
“Instead of a utilitarian area for someone other than the owner to prepare food, buyers today like to cook and take enormous pride in the meals they prepare,” she said.
Middletown, New Jersey (Source: Christie’s International Real Estate Luxury Defined Whitepaper)
“Even if they don’t cook, people still like to entertain in the kitchen with hors d’oeuvres or small plates. It is more welcoming.”
Furthermore, closets continue to grow in size and opulence is taking up extra bedrooms in some cases.
As for recreation, designers are becoming ever more ambitious.
Dallas, Texas (Source: Christie’s International Real Estate Luxury Defined Whitepaper)
Luxury real estate specialists said they had seen ice hockey rinks, a BMX pump course and an irrigated regulation soccer field included in a luxury home estate.
One extraordinary idea was an indoor basketball court, which could be transformed into a formal ballroom, complete with chandelier and sophisticated sound system.
