Sales of ultra-luxury homes have seen a significant surge in New York, Miami, and Palm Beach, Florida, during the second quarter. According to a report from real estate firm Knight Frank, the number of homes selling for $10 million or more increased by 44% in Palm Beach, 27% in Miami, and 16% in New York. This is a stark contrast to the declining trend seen in many other parts of the world.
New York led the U.S. in $10 million-plus home sales in the second quarter, with a total of 72 transactions – its highest in two years. Miami followed closely behind with 55 sales, Los Angeles with 42, and Palm Beach with 36. However, Los Angeles experienced a 29% decline in these sales, primarily due to the new “mansion tax” that adds a 5.5% charge on homes sold for over $10 million.
The second quarter saw some remarkable high-value transactions in the ultra-luxury real estate market. The biggest sale was the $150 million deal for Palm Beach’s only private island, reportedly purchased by Australian infrastructure investor Michael Dorrell. In addition, a historic 3.2-acre estate in Palm Beach sold for $148 million, while the penthouse of the Aman New York was sold for $135 million in July.
Despite a slight slowdown in demand from the peak of 2021, ultra-wealthy buyers are still willing to pay record prices for rare trophy properties. This trend is largely driven by the rising financial markets, which have supported substantial wealth creation. Markets like Dubai, Palm Beach, and Miami have experienced significant growth, offsetting the slowdown in more mature markets.
Globally, in the 11 top luxury markets tracked by Knight Frank, sales of $10 million-plus homes decreased by 4% compared to the previous year, amounting to $8.5 billion. Dubai emerged as the world leader in ultra-luxury real estate, with 85 sales in the second quarter. The city’s appeal lies in its friendly tax and regulatory regimes, attracting ultra-rich individuals from various regions. Despite a slight decline in sales from the previous quarter, Dubai has seen a significant increase in ultra-luxury transactions in recent years.
London experienced one of the steepest declines in ultra-luxury home sales, with a 47% drop from the previous year due to concerns about higher taxes on the U.K. wealthy. However, falling interest rates worldwide are expected to support sales in the second half of the year. Knight Frank predicts that lower rates will lead to increased transaction volumes, potentially continuing into 2025.
The ultra-luxury real estate market is witnessing dynamic shifts, with certain markets like New York, Miami, and Palm Beach experiencing a surge in sales, while others face challenges. The continued demand from ultra-wealthy buyers, coupled with favorable market conditions, is expected to drive the growth of the ultra-luxury real estate sector in the coming years.