While ultra-luxury housing markets are in stagnation in other parts of the world, New York, Miami and Palm Beach, playgrounds for the wealthy and even wealthier, are reaping unprecedented profits.
According to a new report from real estate firm Knight Frank, sales of homes priced above $10 million soared in the second quarter, with Palm Beach leading the way with an astounding 44% increase. Miami followed with a 27% increase, while New York’s most expensive neighborhoods recorded a 16% increase.
New York City emerged as the king of luxury homes, with 72 homes sold for over $10 million, the highest price in two years.
Miami followed suit with 55 top-selling sales, while Palm Beach achieved 36 sales.
Los Angeles also topped the list at 42nd place, but the city suffered a 29% hit, likely due to a new “mansion tax” that imposes a 5.5% tax on the sale of properties over $10 million.
The most enchanting deal of the quarter? Palm Beach’s only private island was purchased by Australian infrastructure tycoon Michael Dorrell for a whopping $150 million. And the Palm Beach story doesn’t end there: In June, a historic mansion on 3.2 acres was sold for a whopping $148 million.
Not to be outdone, Manhattan also joined the mega-sale club in July when a penthouse at Aman New York sold for $135 million, purchased by the project’s developer, Vlad Doronin, himself.
Despite slowing demand in other top markets, ultra-wealthy buyers are willing to pay record prices for these rare gems. Why? “Massive wealth creation is underpinning the growth of the global prime home sales market,” Liam Bailey, global head of research at Knight Frank, told CNBC.
He added that the transformation of hotspots such as Dubai, Palm Beach and Miami “more than offset the slowdown experienced in some of the more mature markets.”
However, globally the situation is not so rosy.
Sales of homes priced over $10 million in the top 11 luxury markets fell 4% in the past year to $8.5 billion, according to a Knight Frank report.
Dubai has become the new global darling of luxury real estate, boasting a staggering 85 deals in the second quarter alone. The city’s friendly tax and regulatory policies have attracted ultra-high net worth individuals from around the world, with deals increasing from just 23 in 2019 to 436 in the past year.
The situation isn’t much better in London, where sales of homes over $10 million plummeted 47% as fears of higher taxes discourage wealthy buyers from buying.
The good news for luxury property brokers is that falling global interest rates could boost sales in the coming months, even as most cash-rich buyers are not borrowing to make their purchases.
And if a record 29 contracts were signed in Manhattan last week for properties over $4 million, the luxury housing market could be booming heading into the end of the year.
“Total transaction volumes are likely to increase through 2025 as interest rates fall,” Bailey told the outlet.