International investors are poised to drive deals and prices in luxury markets around the world as borders reopen.
(Part II of this two-part series focuses on luxury markets in Sydney, London, Dubai and Los Angeles.)
Sydney
After the whopping +31.2% increase in Sydney’s high-end market values during 2021, Tim Lawless, head of research with CoreLogic Asia Pacific, said, “We are already seeing signs that Sydney’s housing market is cooling, with the quarterly rate of growth across the premium end of the market easing from a recent peak of +12.2%…to +5.7% over the three months ending October. Growth rates are still extremely high, but are now consistently easing.”
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Lawless continued. “Next year is likely to see a continuation of this (cooling) trend, with the pace of growth continuing to ease as affordability constraints become more pressing and the potential for higher interest rates and tighter credit conditions dampens activity.”
Lawless anticipates increased demand from overseas migration along with stronger rental demand coming from returning students and international visitors. While Sydney’s blue-chip Northern Beaches will remain popular, Lawless said, “We could see more demand spreading further north to the beach-side suburbs of the Central Coast or south to Illawarra.”
London
While London itself was essentially “overlooked” during the UK’s feverish market conditions during 2021, Savills is predicting stronger demand and a price uptick of +8% in London’s high-end market by the end of 2022.
The number of luxury deals is already picking up, according to Frances Clacy, associate director of residential research with Savills. Clacy believes the international buyer is to have a “significant” impact on both the single-family and apartment sectors.
Clacy anticipates domestic wealthy buyers who relocated to the UK’s countryside during the pandemic peak “will be looking for a pied-a-terre for when they’re working. Clacy is also anticipating that a new pool of “high-end buyers from the tech and life sciences sectors with global wealth will rise quite significantly.”
Dubai
Prices across the emirate jumped +19.9% y/y in October 2021, according to Property Monitor, after the market bottomed out as oil prices collapsed since 2014.
Chris Whitehead, a managing partner with Luxhabitat Sotheby’s International Realty, said, “We are looking at a very strong 2022…we will see more and more luxury travelers headed to Dubai (as) the massive rise in visitor numbers is inevitable next year. And this in turn will surely strengthen the economy…but especially the luxury real estate sector.”
Whitehead said that wealthy buyers will be looking for “…turnkey, bespoke homes with a touch of sophisticated luxury.”
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Los Angeles
Inventory of lux single-family homes, a category that in Los Angeles starts at $8.2M (+10.1% y/y) dropped to its second lowest level on record during Q3 2021, according to Douglas Elliman.
Such record-low inventory levels combined with an almost ravenous appetite for large homes are expected to kick up lux home prices +8% in 2022, according to Knight Frank.
According to an agent with Douglas Elliman, “…I think pricing will remain strong and record-breaking purchase prices will continue in the high-end market…” Lux homes “needing work” will do less well price-wise due to contractors and materials being in short supply.
Thanks to MansionGlobal.
