The Port of Fontvieille Harbor in the Principality of Monaco.
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The ultrawealthy are looking for a better lifestyle and strong investment when it comes to buying their next home, according to a new study.
One-quarter of American ultra-high-net individuals, or those worth $30 million or more, plan to buy a residential property this year, according to the Douglas Elliman and Knight Frank Wealth Report. The average ultra-high-net-worth individual already owns four homes, according to the report. One-quarter of their residential portfolio is outside their home country.
When it comes to priorities for their next big purchase, the ultrawealthy ranked "lifestyle" and "investment" at the top of the list, followed by taxes and safety.
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While luxury real estate has been buffeted by 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 in the U.S., there were 34 sales over $50 million, down from 45 in 2022 but still way up from the pre-pandemic years.
With interest rates stabilizing and possibly falling this year, real estate experts say there are early signs that luxury supply may be growing, which could lead to more sales.
"If we do see a pivot to lower rates, or at least more confidence that inflation is going in the right direction, I think you will begin to see inventory building up again," said Liam Bailey, partner and global head of research at Knight Frank.
The report forecasts that the best-performing U.S. luxury market this year for price growth will be Miami, with an expected increase of 4%, according to the report. New York ranked second in the U.S., with expected price growth of 2%, followed by Los Angeles with 1% growth.
Globally, the top market for luxury real estate is expected to be Auckland, New Zealand, with projected price growth of 10% in 2024. Mumbai ranks second, at 5.5%; followed by Dubai (5%); Madrid (5%); Sydney (5%); and Stockholm (4.5%).
Cars drive along a street in front of high-rise buildings in Dubai, on February 18, 2023. Dubai saw record real estate transactions in 2022, largely due to an influx of wealthy investors, especially from Russia.
Karim Sahib | Afp | Getty Images
Last year, the world's top 100 luxury real estate markets posted a solid 3% gain on average price. The best-performing luxury real estate market in the world was Manila, Philippines, with 26% growth, fueled in part by investors fleeing Hong Kong and China. Dubai came in second place, at 16% price growth, followed by the Bahamas at 15% and the Algarve region in Portugal at 12%.
Among the worst performers last year were New York, with prices down 2%, and San Francisco, basically flat at 0.5%. The biggest decline in the world among prime markets was Oxford, in the U.K., down 8%.
Bailey said ultrawealthy American buyers are increasingly venturing overseas. He said U.S. buyers are now the leading foreign purchasers of ultraprime London properties — those priced above $10 million. They are also increasingly active in Europe.
"They've become quite a big presence, so much more noticeable now in Italy, France and Portugal particularly than they were," Bailey said. "I think the American buyers have become much happier to explore and kind of think about alternatives."
Still, $1 million doesn't buy what it used to in the U.S. and abroad. In Monaco, the world's most expensive real estate market, $1 million gets you 172 square feet of prime real estate, according to the Wealth Report. In Aspen, you get 215 square feet, while in Hong Kong, you get 237 square feet, which makes New York look like a bargain with 367 square feet.
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