A new report by real estate agency Knight Frank finds that 153 properties in six cities’ “ultra-prime” category sold for a combined total of $6.6 billion in the last year, or an average of $43 million per house.
Hong Kong led the world in sales over $25 million, followed by New York, then London.
According to the global head of research at Knight Frank, Liam Bailey, “There are a lot of people making a lot of money, and they’re willing to pay significantly more to access the right product.”
Bailey’s team identified 129,730 people on the planet with more than $50 million in investable assets in 2017. They saw consistent participation from those individuals in the ultra-prime market in just 17 geographic sales areas. “I’d expected there to be more locations,” Bailey says.
While the recent headlines for global real estate markets have not been positive, the image portrayed by the Knight Frank report is rather striking. Despite housing for the wealthy sinking, the market sustained by the super-rich is still robust.
Bailey says that the perception that the very top of the market is in trouble is the result of oversupply, not waning demand. “There’s more inventory,” he says. “In New York’s case, the story has been about the slowing market. But the background is that the market has actually grown in sales, but there’s just that much more property to purchase.”
Hong Kong had the highest number of transactions and was the most expensive. 47 properties sold for a combined $2.5 billion, or an average of $52.8 million per house.
The top end of New York’s market increased by 50 percent between 2015 and 2017, the report says; in the last 12 months, there were 39 recorded sales above $25 million, totalling $1.5 billion.
London’s market, in contrast, has notably deflated. While it once led the world in super-prime real estate, the report cites concerns over Brexit, along with higher stamp duty charges, to explain London’s decline. In 2015, the report says, more than $2.8 billion in prime real estate changed hands; this past year was $1.5 billion, more than a 46 percent decline.
Bailey notes, “increasingly, the ultra-prime market is being led by new developments.” and the strength at the very high end of the market is “a long-term trend”
Source Credit: James Tarmy – Bloomberg Pursuits
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