The Truth About Ultrawealthy Homebuyers

The Truth About Ultrawealthy Homebuyers

The ultrawealthy demographic in America, those with a net worth of $30 million or more, are shifting their focus when it comes to buying residential properties. According to recent studies conducted by Douglas Elliman and Knight Frank, one-quarter of ultra-high-net individuals are planning to invest in real estate this year. Surprisingly, the average ultrawealthy person already has four properties in their portfolio, with one-quarter of those investments located outside of their home country.

Traditionally, when looking to purchase a new property, ultrawealthy individuals have primarily considered factors such as taxes and safety. However, the recent study reveals a new trend among the ultrarich – a shift towards valuing “lifestyle” and “investment” above all else. This shift indicates a desire for not only a luxurious living environment but also a profitable asset that can appreciate in value over time.

Trends in Luxury Real Estate Market

While the luxury real estate market has faced challenges such as low inventory, slow sales, and rising prices, the ultra-high-end sector has shown resilience. In the United States, there were 34 transactions over $50 million last year, a slight decline from the previous year but significantly higher than pre-pandemic levels. With interest rates stabilizing and potentially decreasing, experts anticipate a growth in luxury supply, leading to increased sales activity.

The report predicts that the top-performing luxury real estate market in the U.S. this year will be Miami, with an expected price increase of 4%. Following closely behind are New York with 2% growth and Los Angeles with 1% growth. On a global scale, Auckland, New Zealand, is anticipated to experience the highest price growth at 10% in 2024. Other notable markets include Mumbai, Dubai, Madrid, Sydney, and Stockholm with projected growth ranging from 4.5% to 5.5%.

In the past year, the world’s top 100 luxury real estate markets saw an average price growth of 3%. Notably, Manila, Philippines, emerged as the best-performing market with a 26% increase in prices, driven by investors seeking refuge from Hong Kong and China. Conversely, New York and San Francisco saw declines of 2% and 0.5%, respectively, while Oxford, U.K., experienced an 8% drop in prime market prices.

Rising Trend of Overseas Investments

According to Liam Bailey, ultrawealthy American buyers are increasingly looking beyond domestic markets for real estate opportunities. U.S. buyers are now the primary foreign purchasers of ultraprime properties in London, priced above $10 million, and are expanding their presence in European markets such as Italy, France, and Portugal. This shift signifies a growing comfort among American buyers to explore international options and diversify their real estate portfolios.

Changing Value of Real Estate Investments

Despite the attractiveness of overseas markets, the purchasing power of $1 million has diminished both in the U.S. and abroad. In cities like Aspen and Hong Kong, $1 million buys a significantly smaller square footage compared to New York, making the latter appear relatively more affordable. This changing landscape underscores the evolving nature of real estate investments and the need for ultrawealthy individuals to adapt their strategies accordingly.


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