Top Real Estate Markets for High Net Worth Individuals in 2024
For high net worth individuals (HNWIs) looking to invest in real estate, finding a property that offers a luxurious lifestyle and strong investment potential is crucial. According to the Douglas Elliman and Knight Frank Wealth Report, a quarter of American ultra-high-net individuals, those worth $30 million or more, are planning to purchase a residential property this year. These individuals already own an average of four homes, with a quarter of their portfolio located outside their home country.
When it comes to their priorities for their next big purchase, lifestyle and investment are at the top of the list for the ultrawealthy. They also consider factors such as taxes and safety. While luxury real estate has faced challenges such as low supply, slow sales, and rising prices, the ultra-high-end market has fared slightly better. In the U.S., there were 34 sales over $50 million last year, down from 45 in 2022 but still significantly higher than pre-pandemic levels.
Real estate experts believe that with stable or potentially falling interest rates this year, there are early signs of luxury supply increasing, which could lead to more sales. Liam Bailey, partner and global head of research at Knight Frank, suggests that if there is a pivot to lower rates and confidence that inflation is going in the right direction, inventory will begin to build up again.
According to the report, Miami is expected to be the best-performing luxury market in the U.S. this year, with an anticipated price growth of 4%. New York ranks second with expected growth of 2%, followed by Los Angeles with 1% growth. Globally, Auckland, New Zealand is projected to be the top market for luxury real estate, with an expected price growth of 10% in 2024. Mumbai ranks second at 5.5%, followed by Dubai, Madrid, Sydney, and Stockholm.
In 2023, the top 100 luxury real estate markets worldwide saw an average price gain of 3%. Manila, Philippines was the best-performing market, experiencing 26% growth, partly due to investors fleeing Hong Kong and China. Dubai came in second place with 16% price growth, followed by the Bahamas at 15% and the Algarve region in Portugal at 12%. On the other hand, New York experienced a decline in prices by 2%, and San Francisco remained almost flat at 0.5%. The biggest decline among prime markets was seen in Oxford, U.K., with an 8% decrease.
Bailey also noted that ultrawealthy American buyers are increasingly venturing overseas. They are now the leading foreign purchasers of ultraprime properties in London priced above $10 million and are becoming more active in Europe, particularly Italy, France, and Portugal. American buyers are exploring alternative options and expanding their real estate portfolios internationally.
However, the cost of luxury real estate continues to rise both in the U.S. and abroad. In Monaco, considered the world’s most expensive market, $1 million only gets you 172 square feet of prime real estate. In Aspen, that amount will give you 215 square feet, and in Hong Kong, it will get you 237 square feet. Despite this, New York appears relatively more affordable with 367 square feet for $1 million.
For high net worth individuals seeking to invest in real estate, it is essential to consider the top markets for luxury properties. With a focus on lifestyle and investment potential, these individuals are looking for opportunities both domestically and abroad. As interest rates stabilize and luxury supply potentially increases, the luxury real estate market may see a boost in sales. Whether it’s Miami, Auckland, or any other top market, HNWIs have a range of options to choose from to fulfill their real estate desires.
