According to its 14th annual Wealth Report by Knight Frank and Douglas Elliman Real Estate, ultra-luxury real estate prices in metro Miami could rise +5% this year. Such a rise would be the second fastest growth rate of ultra luxury properties among 20 global cities.
The Wealth Report forecasts that prime property prices are to rise +6% in Berlin, Cape Town, Madrid and Paris. Elsewhere, declines between -2 % to -10% are forecasted for 5 of the 20 top global markets. Dubai and Hong Kong are two of such cities forecast to experience downturns in property prices.
Knight Frank and Douglas Elliman Real Estate define “prime residential property as “…the most desirable and most expensive property in a given location…to 5% of each market by value. “
Last year, national prime presidential property prices increased just +1.3%, the slowest appreciation rate since 2012.
Prime residential property prices in Miami, however, increased +3.3% in 2018 compared to 2017. The Wealth Report also indicated that 33,000 millionaires now live in Miami. Many of those millionaires were likely propelled to live in Miami due to the state’s very favorable tax environment.
Worldwide, Knight Frank and Douglas Elliman Real Estate predict slower growth in prime property prices as the central banks end easy, fluid monetary policies. Liam Bailey, a partner in Knight Frank and global head of research, said, “As we learn to live without ultra-low interest rates that have supercharged real estate markets globally since 2008, lower price growth is an inevitable consequence of the shift in monetary policy. The beginning of the end of ultra-low interest rates…is beginning to put pressure on (residential property) prices in many markets.”
Even though many wealthy investors are looking to tangible assets such as wine, autos and antiques, the Wealth Report indicates that 29% of ultra high net worth individuals (individuals that have +$30M excluding the value of their homes) are “considering buying a second home this year.” Why? Because they see owning property as a “long-term store of value.”