Move over New York, luxury deals are now being struck in the east

  • Namrata Kohli
  • Updated: Jun 06, 2016 14:08 IST
Hong Kong is among the highest performing markets in the world. (iStock)

Which were the biggest real estate transactions around the world in 2015? The highest priced real estate sales worldwide in 2015, according to the latest annual Luxury Defined 2016 report by Christie’s International Real Estate, were steered by the record $193.5 million (Rs 1,287 crore) sale of a single-family home in Hong Kong’s The Peak district.

The top five sales rounded out with the $141 (Rs 938 crore) million sale of a townhouse in London; a $91.5 million Rs 608 crore) new development penthouse in New York; a $77.5 (Rs 515 crore)million co-op in New York; and a $71.2 (Rs 473 crore) million single-family home in Palm Beach, Florida. At least four properties have sold for $50million (Rs 332.6 crore) or more around the world in 2016.

The highest performing (price performance) markets in the world include London, Hong Kong, New York, Los Angeles and Singapore. For the fourth year in a row, London commands the top position as the world’s most luxurious property market (in terms of price performance). Despite new taxes on £1.5m-plus homes and capital gains tax, London continues to attract domestic and international buyer demand.

Hong Kong narrowly edged out New York to place second in the luxury index even with negative annual overall sales growth and pressures from a decline in mainland Chinese capital outflow. Singapore knocked Dubai— where pressures from declining oil prices and an oversupply of luxury properties caused price and sales volume declines — out of the world’s top 10 luxury markets.

Which is the world’s “hottest” city for luxury real estate? The answer is Auckland, which posted a 63% growth in million-dollar-plus sales thanks to strong international and local demand. The findings were based on Christie’s International Real Estate survey of 100 affiliate markets. Auckland overtakes Toronto as the world’s hottest luxury housing market.

Traditionally strong markets are facing the heat of the downturn and giving way to creation of new markets. For instance, the traditionally strong markets for international buyers such as New York, London, and Miami have reported a decrease in buyers from countries including Russia and Brazil. Exchange rates, coupled with other financial and political concerns have negatively impacted some markets but at the same time, they have created opportunities in others, particularly emerging luxury markets such as Cape Town, South Africa; Cartagena, Colombia; and Dublin, Ireland; Argentina and Canada. Strength of the Pound and tax incentives encouraged UK investors to purchase predominantly in the US, France, Spain, Bermuda and Ireland.

Which country’s investors are the most active in global real estate? As many as 21% of all luxury markets ranked UK buyers in their top three. Of those, 92% saw an increase/ constant flow of UK buyers and only 8% saw a decrease. A weak Euro presented opportunities to purchase second homes in prime European destinations, including Paris. Chinese investors are still active despite slowdown in the economy and stock market sell off. Chinese currency devaluation, stock-market sell offs, tightening capital flow restrictions didn’t slow the buying power of China UHNWIs.

Finally, who is driving the growth in million-dollar-plus homes? Despite the economic slowdown, there is a set of emerging buyers driving million-dollar-plus home sales. According to Dan Conn, CEO, Christie’s International Real Estate, “Emerging buyers are increasingly influencing the prime property market and will continue to evolve the marketplace in the future. These up-and-coming buyers include ‘millenipreneurs’ (affluent millennial entrepreneurs) and high-income workers from the burgeoning tech sector. Growth in traditional industries like automobiles has also spurred resurgence in some of these ‘comeback’ markets.”

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