Global super-prime home sales up 11% in 1Q2023; Dubai retains top market position: Knight Frank

receives high interestTotal sales value of global super-prime homes rose marginally from US$7.5 billion in 4Q2022 to $7.2 billion in 1Q2023, according to Knight Frank’s Global Super-Prime Intelligence report. Despite the higher number of transactions however, the market has been weighed down by higher debt costs as well as limited stock availability which has dampened transaction activity in recent months. Despite the uncertainty around global inflation and the rising interest rate environment, the market has “remained resilient”.Dubai has emerged as the top contributor to global super-prime home sales, accounting for 17% of transactions as of end-March, followed by London (14%) and New York (13%). Hong Kong has also seen a surge in super-prime home sale activity in 1Q2023, attributed to its recent reopening which resulted in a notable uptick in the number of mainland Chinese buyers.Singapore came in fifth place in terms of super-prime sales, registering 37 transactions worth a total of US$579 million. In terms of prices, Singapore clocked an average of US$15.6 million per home, significantly lower than the leading markets of Geneva, London and Dubai in which super-prime homes sold at an average of US$23.8 million, US$20.4 million and US$18.8 million respectively.Knight Frank predicts that total super-prime home sales will come in at between US$25 billion and US$27 billion this year, resulting in a lower figure than the US$32.6 billion recorded in 2022. The consultancy expects changes in tax measures in select markets to have an impact on buyer behaviour, with Hong Kong’s stamp duty rules recently being relaxed and Singapore’s additional buyer’s stamp duty hike for foreigners from 30% to 60%.The recovery in global economy growth later this year may aid in lifting super-prime sales in 2024, with a potential return to sales value in excess of US$30 billion. Super-prime residential sales activity has remained resilient despite a period of economic headwinds, reflecting an ongoing desire for luxury housing and a will to invest in prime locations.

Global super-prime home sales recorded a marginal increase in 1Q2023, according to Knight Frank’s latest Global Super-Prime Intelligence report. A total of 417 such transactions were recorded in the quarter, an 11% increase from the 376 in the previous quarter. In terms of total sales value however, the market fell from US$7.5 billion in 4Q2022 to $7.2 billion in 1Q2023.

As of end-March, there have been a total of 1,645 super-prime residences sold across the 12 key markets tracked by the consultancy, indicating a 28.4% decrease compared to the recent peak of 2,298 in the year ending December 2021. Total value of such sales was at US$30.2 billion, 26% lower than the $40.7 billion achieved in the same period last year.

Nevertheless, the 1Q2023 figures demonstrate a return in activity following a noticeable slowdown over the past three quarters, reflecting an ongoing desire for luxury housing despite the uncertainty around global inflation and the rising interest rate environment. Notable markets include Dubai maintaining its top position, with 88 homes sold at over US$10 million and an accompanying total sales value of US$1.66 billion. Hong Kong, with 67 super-prime home sales at US$988 million in 1Q2023, attributed due to its reopening post-Covid-19, witnessed a notable number of mainland Chinese buyers.

Other top markets included New York (US$942 million) and Los Angeles (US$763 million), both experiencing more than 50 transactions in the first quarter of 2023. Singapore accounted for fifth place with its 37 super-prime residential transactions worth US$579 million, an increase from the 23 homes sold in 4Q2022 for $409 million. Prices in Singapore clocked an average of US$15.6 million compared to Geneva, London and Dubai with their significantly higher averages at US$23.8 million, US$20.4 million and US$18.8 million respectively.

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Knight Frank predicts that total super-prime home sales will come in at between US$25 billion and US$27 billion this year, an amount lower than the US$32.6 billion across 1,763 transactions in 2022. The sluggish market is largely due to higher debt costs and limited stock availability, with delays to new project launches affecting markets like Geneva, Paris and Hong Kong in particular.

Despite this, there remain bright spots in select cities such as London, New York and Los Angeles, along with regional wealth hubs like Singapore and Hong Kong. Cross-border demand also continues to remain strong, boosted by increased tourist flows from Asia, the Middle East and the US to cities like London and Paris.

Changes in tax measures in select markets are set to affect buyer behaviour in the upcoming months, with exemptions in Hong Kong and hikes in Singapore. Knight Frank expects the recovery in growth of global economy later this year to lift super-prime sales next year, with a potential return of sales in excess of US$30 billion.