In its latest report on high-end residential properties that are priced above US$10 million (RM45 million) across 12 cities, the Knight Frank Global Super-Prime, Intelligence Report indicated the total number has somewhat come down, pointing to the fact the global economic headwinds had put a dent in luxury purchases.
According to the report, in Q2 this year the total number was 422 which is 11% below the 475 recorded in Q1 of this year and 13% below the 483 sales seen in Q2 2022. Knight Frank alludes to high-interest rates being the main culprit that has impacted all levels of the global housing market, and the luxury segment is not being immune. That said, sales in the 12-month period up to June of this year (totalling 1,638 globally) are still running well ahead of the levels seen pre-pandemic (1,009 in 2019).
Despite the year-on-year decline in overall sales, four markets saw volumes rise, led by Dubai (up 79% between Q2 2022
and Q2 2023), Sydney (up 46%), Paris (up 17%), and Geneva (up 7%). The biggest declines over the year were seen in
key US markets, led by Los Angeles (down 63%).
Liam Bailey, global head of research at Knight Frank said: “Super-prime sales globally have retreated from recent highs but are still outpacing pre-pandemic levels. Dubai continues to lead the pack but London and New York are still
seeing healthy volumes. The biggest constraint across a majority of markets in the near term is supply – a lack of new
development starts between 2020 and 2022 means a lean 2024 for new delivery, pointing to rising competition for available
stock which should act to put a floor under pricing.”
Total sales volumes for the second quarter of 2023 amounted to US$7.3 billion across the 12 markets. Dubai leads with a
total volume of US$1.5 billion, with London and New York also seeing sales above US$1 billion. Total sales in the 12
months up to June in all markets stood at under US$30 billion, down from the peak of US$40.7 billion seen in 2021 but well
ahead of the pre-pandemic figure of US$18.6 billion in 2019.
While US housing markets have faced challenges gaining traction this year, primarily due to the impact of higher interest
rates, the super-prime New York market has shown greater resilience thanks to a substantial presence of cash buyers. Dominic Heaton-Watson, Associate Director, International Residential at Knight Frank Property Hub said: “While US housing markets have faced challenges gaining traction this year, primarily due to the impact of higher interest rates, the super-prime New York market has shown greater resilience thanks to a substantial presence of cash buyers.
Turning to Asia, Singapore’s super-prime market is experiencing a squeeze in sales volumes due to high purchase taxes,
reaching up to 60% for foreign buyers in some cases. Although the city has been successful in attracting wealth
management and family office investments, this interest has not translated into increased sales activity, as the market is
adapting to rely more on domestic purchasers.
In Hong Kong, luxury demand has received a boost from mainland buyers, who had been largely absent from the market between 2020 and 2022. With greater travel expected in the remainder of the year, there is potential for increased demand.
Locally in Malaysia, Benjamin Tee, managing director of Knight Frank PropertyHub said: “Despite facing economic
challenges during the pandemic, the Malaysian market has displayed resilience, with luxury property sales in the prime
fringe of Kuala Lumpur remaining robust and rental exceeding the pre-pandemic benchmarks. Luxury demand in Malaysia.
