The number of homes sold in the super-prime market were up in the 1Q2023 as 417 of these transactions were reported in the last quarter, as per the most recent version of the Knight Frank’s Global Super-Prime Intelligence report. The company that defines super-prime homes as homes that are sold for more than $10 million ($13.5 million) and notes that the number represents an 11% in q-o-q growth from the 376 transactions reported in during the prior quarter. Despite the increased quantity of homes that were sold as super-prime however, the value of sales for all homes decreased slightly by US$7.5 billion during 4Q2022 and $7.2 billion in the 1Q2023.
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In the twelve months up until March’s end 1 645 super-prime houses were sold in the 12 markets that are monitored by the consulting firm. The figure is 28.4% lower than the most recent record of 2,298 sales reported in the year to December 2021. As for total values of sales, US$30.2 billion worth of super-prime homes sold over the year to close of March, 26% less than $40.7 billion sold in 2021 during the peak of the pandemic property boom.
But, Knight Frank says the 1Q2023 numbers suggest an increase in super-prime house selling activity after a significant decline over the last three quarters. The company says this market “remained strong” despite economic challenges, Nicholas Keong, head of the private office department in Knight Frank Singapore, adds that the increase in activity is a reflection of the ongoing demand for luxurious homes despite the uncertainty surrounding global inflation as well as the growing interest rates.
Dubai continues to be an active and thriving super-prime real estate market with 88 homes sold at more than US$10 million during 1Q2023 to a total sale worth US$1.66 billion, as compared to the 75 sales (US$1.4 billion) in the preceding quarter. Hong Kong came in second with 67 homes being purchased for US$988 million in 1Q2023, a rise from 30 transactions reported in 4Q2022 to an overall value of $779 million. Knight Frank attributes the surge to the city’s reopening following Covid-19 which led to significant increases in Chinese buyers from mainland Chinese buyers.
Other top markets for the 1Q2023 period include New York, with 58 homes sold for US$942million; as well Los Angeles, with 46 homes sold for $763 million. Singapore was fifth with 37 super-prime residential transactions totalling US$579 million. This was an increase over the 23 homes that were sold in 4Q2022 at a cost of $409 million. Prices are also high homes that were sold at super-prime prices in Singapore averaged around US$15.6 million. By comparison, Geneva clocked the highest average of US$23.8 million following by London which was US$20.4 million, and Dubai with US$18.8 million.
In the study, Knight Frank highlights Dubai’s ever-growing importance in the super-prime global residential market. “Our most recent research confirms the appearance of Dubai as an integral component of the wealth distribution,” the report states. The city represented two% of all super-prime home sales across the key markets monitored by Knight Frank. In the month of March, that percentage has been boosted to 17% and makes the city the largest factor in super-prime global home sales which is being followed by London (14%) and New York (13%).
“Dubai’s sales growth has pushed prices for prime homes there up 150% since the start of 2020. This is well ahead of what is that are seen in comparable markets” the report says.
Knight Frank predicts that total super-prime home sales will be between US$25 billion to US$27 billion this year. This is less than US$32.6 billion that was recorded in 1,763 transactions recorded in 2022. The more sombre forecast comes as the market is affected by the rising expenses for debt and the lack of stock available, which has reduced transactions over the last few months. Particularly, the firm says that markets such as Geneva or Paris have experienced a dearth of opportunities for development despite a strong demand, while restrictions related to Covid-19 on Hong Kong resulted in delays for new project launches.
There are bright spots in a variety of areas of the market particularly in major cities like London, New York and Los Angeles, along with regional hubs for wealth such as Singapore in Singapore and Hong Kong. Furthermore, demand from across the border remains strong and is boosted by Hong Kong’s opening and the increase in travel flows coming from Asia as well as Asia, the Middle East and the US to cities such as London as well as Paris.
Knight Frank expects changes in tax laws in certain markets will have a significant effect on the buying behavior of buyers. It is the case in Hong Kong, where stamp duty regulations have been recently eased to permit eligible non-resident buyers buying an property located in Hong Kong to receive an exemption from the 30% stamp duty that they have paid on the purchase after being within Hong Kong for seven years and then obtaining permanent residency. The increase in Singapore in the additional buyer’s stamp duty for foreign buyers between 30% to 60% up to 60% that took effect on the 27th of April could negatively impact demand in the city-state over the next quarters.
Despite a less sluggish housing market for 2023 Knight Frank expects a better outlook for the coming year. “The increase in growth in this global economic environment later in this year will help the sale of super-prime homes in 2024, bringing the total to sales that exceed $30 billion,” predicts Keong.