Over the past year billionaire wealth has reached record highs. Now comes the real estate boom as they blow their newly-earned cash on $10 million-plus properties.
So far this year, 785 properties worth more than $10 million have been sold in New York, Los Angeles, Hong Kong, London, Sydney, Singapore and Dubai. Knight Frank, a real estate consultancy, estimates that figure is more than double last year’s and up 52% on 2019’s.
In total, wealthy buyers around the world spent $13.8 billion on homes valued in excess of $10 million during the first six months of this year. “We expect super-prime sales to end 2021 on a high,” comments Liam Bailey, global head of research at Knight Frank.
New York has seen the biggest increase in the super-prime category, with 202 sales above $10 million this year. The city has just clocked its most expensive property listing ever: A penthouse at 432 Park Avenue valued at $169 million.
The penthouse might just sell for its asking price: Already there have been 220 penthouses sold in Manhattan this year, according to Corcoran market research. A separate report from Douglas Elliman and Miller Samuel shows the median price for Manhattan apartments hit $999,000 in the second quarter of this year, a new record.
After New York, Los Angeles has seen the biggest increase in super-prime sales. Transactions of $10 million-plus properties this year are three times higher than the same period last year, which Paddy Dring, global head of prime sales at Knight Frank, says is down to “lifestyle advantages, such as beaches and green space.”
But there is more to this real estate boom than lifestyle needs. The rich have amassed a record amount of wealth in the past year, and, with Covid-19 restrictions easing, they are desperately seeking somewhere to put it.
Prospective home buyers attend a sound bath session during at 1049 Loma Vista Drive in Beverly … [+] Hills, Los Angeles.
During the first 12-months of the Covid-19 pandemic, wealth hit record highs. By October 2020, billionaire wealth surpassed $10 trillion for the first time ever. Forbes’ list of billionaires, now at 2,755 individuals, grew their wealth from $8 trillion in 2020 to $13.1 trillion this year.
But with inflation around the corner, these billionaires and millionaires are now looking for somewhere to invest this new found wealth. Half of the investors surveyed by UBS in the second quarter believe inflation will accelerate over the next 12 months, and a third of them are planning to invest more in real estate to circumvent it from eroding their wealth.
Doubts over the future of the office are making residential real estate increasingly attractive for investors with cash to burn. There will always be a need for quality housing in New York, Los Angeles, Hong Kong, London, Sydney, Singapore, and Dubai.
A man swims in the Sky Pool, a transparent swimming pool between two exclusive residential blocks in … [+] Nine Elms, south London.
PA Images via Getty Images
But whether the wealthy will follow their money and return to these cities with their newly purchased apartments is still unknown.
By July last year, nearly half of wealthy individuals around the world had fled cities for good. Expats from Singapore and Dubai returned home and brought properties in the suburbs or rural areas. Alongside record $10 million-plus properties, countryside markets have reached record highs this year.
One billionaire, speaking over Zoom from an English vineyard he purchased just before the pandemic, says there is “not a hope” he will return to London full time. And yet he is still eyeing up real estate investments in the capital. Sales of $10 million-plus homes in London are up 10% on last year.
Buying prime property is a “tried and tested” way to ward off inflation, he says. But it is also a vote of confidence that, one day, these cities will again thrive.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
