Sales of ultra-luxury homes have seen a significant surge in top markets such as New York, Miami, and Palm Beach, Florida, during the second quarter of the year. According to a report from real estate firm Knight Frank, the number of homes selling for $10 million or more experienced a 44% increase in Palm Beach, 27% in Miami, and 16% in New York. Despite this surge in sales in these areas, many other global markets experienced a decline during the same period.
New York led the U.S. in $10 million-plus sales with a total of 72, marking its highest total in two years. Miami followed closely with 55 sales, Los Angeles with 42, and Palm Beach with 36. However, Los Angeles saw a 29% decline in ultra-luxury sales, mainly due to the newly implemented “mansion tax” which imposes a 5.5% charge on homes sold for over $10 million. Noteworthy sales in the quarter included a $150 million deal for Palm Beach’s only private island, a $148 million sale of a historic estate in Palm Beach, and the $135 million sale of the penthouse at the Aman New York.
Although demand in many top luxury markets is slowing from its peak in 2021, ultra-wealthy buyers continue to pay record prices for exclusive properties. Rising financial markets have played a significant role in boosting these sales. The growth in the global super-prime sales market has been supported by substantial wealth creation, especially in markets like Dubai, Palm Beach, and Miami. Despite the overall slowing down of the ultra-luxury real estate market, Dubai stands out as a leader with 85 sales in the second quarter. The city’s appeal lies in its friendly tax and regulatory regimes, attracting ultra-rich individuals from various parts of the world.
London, on the other hand, witnessed one of the steepest declines in ultra-luxury home sales, experiencing a 47% drop from the previous year. This decline was attributed to fears of higher taxes on the wealthier population in the U.K. While ultra-luxury buyers typically pay in cash for their properties, the decrease in interest rates worldwide is expected to support sales in the second half of the year. According to Knight Frank, lower interest rates could potentially lead to higher transaction volumes in the coming years.
The ultra-luxury real estate market is experiencing contrasting trends across different regions globally. While some markets are thriving and setting new records, others are facing challenges and uncertainties. The impact of factors such as taxes, interest rates, and market dynamics will continue to shape the ultra-luxury real estate landscape in the foreseeable future.