Knight Frank’s Annual Wealth Report showed a record increase in sales prices during 2021.
Five US Cities Had Exceptional High Appreciation Rates in 2021
Among 100 cities worldwide, five US locales experienced extraordinarily high luxury home price appreciation rates in 2021. Those areas included:
- San Diego CA – +28.3%
- Miami FL – +28.2%
- The Hamptons – 21.3%
- San Francisco CA – +18.6%
- Los Angeles CA – +18.5%
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Top Gainer in Lux Home Prices in 2021 – Dubai
Dubai saw the biggest gain in luxury-home prices of any major global city during 2021, according to Knight Frank’s 2021 Annual Wealth Report. Dubai’s luxury home prices jumped a huge +44.4% from December 2020 to December 2021.
Kate Everett-Allen head of international residential research with Knight Frank,said, “The U.A.E.’s handling of the pandemic, strong take-up of the vaccine, the delivery of high-end turnkey projects as well as innovative new visa initiatives and economic reforms, have together boosted Dubai’s profile in the eyes of international buyers.”
Sales of homes with price tags above $10M have historically accounted for about 2% of all sales in Dubai…in 2021, sales of home priced at $10M+ accounted for 7% of all luxury home transactions in Dubai, according to Everett-Allen.
Moscow followed Dubai with an increase of +42.4% in home appreciation due primarily to Russia’s mortgage subsidy program and tight inventory.
Notably, luxury homes in warmer areas around the world experienced home appreciation increases of +10.2%. Luxury home price appreciation in ski areas hit +7.2%, according to Knight Frank’s report.
Knight Frank’s Prime International Residential Index for 2021
Luxury home sale prices increased the most in these global cities:
- Dubai +44.4% y/y
- Moscow +42.3% y/y
- San Diego +28.3%
- Miami +28.1%
- The Hamptons +21.3%
- Seoul +21%
- Toronto +20.3%
- Taipei +18.9%
- San Francisco +18.6%
- Los Angeles +18.5%
Multiple Factors Contributed to Increase in Demand & Rise in Prices
Knight Frank analysts believe that multiple factors fueled 2021’s exceptionally high increases in luxury home price appreciation levels. Those factors included:
- low mortgage rates
- pandemic-inspired shifts in lifestyle choices
- more flexible working patterns
- wealth creation – there were +5M new millionaires added in the world during 2021
The report said, “Access to technology and the digital democratization of investments, including private equity, have led to greater levels of wealth creation and growth. This is something that will gain momentum over the coming years.”
Pierre-Yves Lombard, managing director and deputy head of private banking with Lombard Odier for the Asia Region, said, “We are seeing increasing interest in both indirect exposures by way of real estate investment trusts for example, and direct investment in physical real estate, especially as a hedge against potential inflation.”
What to Watch in Luxury Home Price Appreciation in 2022
Experts believe that luxury housing remains on track for another boom year in 2022.
According to Liam Bailey, global head of research with Knight Frank, “Dubai, Miami and Zurich lead our 2022 forecast, with prime prices expected to end the year between +10% and +12% higher. Asian cities are expected to trail slightly, but even here, prices will grow.”
Bailey believes that key watch points for 2022 include:
- low inventory
- rising taxes
- cooling measures such as increasing mortgage interest rates
- resurgence of demand in city markets
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Thanks to Knight Frank.
