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

/ EdgeProp Singapore |

June 7, 2023 10:25 AM SGT

Luxury villas on the Palm Jumeirah waterfront in Dubai (Picture: Bloomberg)

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SINGAPORE (EDGEPROP) - Sales of global super-prime homes rose in 1Q2023, with 417 such transactions recorded last quarter, according to the latest edition of Knight Frank’s Global Super-Prime Intelligence report. The consultancy, which defines super-prime residences as those transacted at over US$10 million ($13.5 million), notes the figure represents an 11% q-o-q increase from the 376 transactions recorded the previous quarter. Despite the higher number of super-prime homes sold, total sales value fell marginally from US$7.5 billion in 4Q2022 to $7.2 billion in 1Q2023.

In the 12 months to the end of March, 1,645 super-prime residences were sold across the 12 key markets tracked by the consultancy. This is 28.4% lower than the recent peak of 2,298 sales registered in the year ending December 2021. In terms of total sales value, US$30.2 billion worth of super-prime homes were sold in the last year as of end-March, 26% less than the $40.7 billion reached in 2021 at the height of the pandemic property boom.

Nonetheless, Knight Frank says the 1Q2023 figures point to a bounce-back in super-prime home sale activity following a noticeable slowdown over the past three quarters. Noting that the market has “remained resilient” despite economic headwinds, Nicholas Keong, head of private office at Knight Frank Singapore, adds that the uptick in activity reflects an ongoing desire for luxury housing despite the uncertainty around global inflation and the rising interest rate environment.

Dubai maintains its position as the most active super-prime residential market, with 88 homes sold at over US$10 million in 1Q2023 for a total sales value of US$1.66 billion, compared to 75 transactions (US$1.4 billion) in the previous quarter. Hong Kong came in second, with 67 homes sold for US$988 million in 1Q2023, rising from the 30 transactions posted in 4Q2022 for a total of US$779 million. Knight Frank attributes the surge to the city’s reopening post-Covid-19, which resulted in a notable uptick in the number of mainland Chinese buyers.

Other top markets in 1Q2023 include New York, with 58 homes sold for US$942 million; and Los Angeles, with 46 homes sold for US$763 million. Singapore came in fifth place, registering 37 super-prime residential transactions worth US$579 million, an increase from the 23 homes sold in 4Q2022 for US$409 million. In terms of prices, super-prime home sales transacted in Singapore averaged at around US$15.6 million. In comparison, Geneva clocked the highest average price at US$23.8 million, followed by London at US$20.4 million and Dubai at US$18.8 million.

In its report, Knight Frank highlights Dubai’s steadily growing importance in the global super-prime residential market. “Our latest data confirms the arrival of Dubai as a critical part of the world’s wealth landscape,” the report states. In 2019, the city accounted for 2% of all super-prime sales across key markets tracked by Knight Frank. For the year ended March, this proportion has swelled to 17%, making it the biggest contributor to global super-prime home sales, followed by London (14%) and New York (13%).

“Dubai’s sales boom has helped propel prime prices there higher by 149% since the beginning of 2020, well ahead of the numbers seen in comparable markets,” the report adds.

Knight Frank predicts that total super-prime home sales will come in at between US$25 billion and US$27 billion this year, lower than the US$32.6 billion recorded across 1,763 transactions in 2022. The more subdued outlook comes as the market continues to be weighed down by higher debt costs as well as limited stock availability which has dampened transaction activity in recent months. In particular, the consultancy notes that markets like Geneva and Paris have seen a lack of development opportunities despite strong demand, while Covid-19-related restrictions in Hong Kong resulted in delays to new project launches.

Bright spots remain in various pockets of the market, especially in key cities such as London, New York and Los Angeles, along with regional wealth hubs like Singapore and Hong Kong. In addition, cross-border demand continues to remain healthy, boosted by Hong Kong’s reopening and increased tourist flows from Asia, the Middle East and the US to cities like London and Paris.

Singapore saw 37 super-prime residential transactions worth US$579 million in 1Q2023 (Picture: Samuel Isaac Chua/The Edge Singapore)

Knight Frank expects changes in tax measures in select markets to have an impact on buyer behaviour. This includes Hong Kong, where stamp duty rules have recently been relaxed to allow eligible non-resident buyers who purchase a property in the city to get a refund on the 30% stamp duty paid on their purchase upon staying in Hong Kong for seven years and obtaining permanent residency. In contrast, Singapore’s hike in additional buyer’s stamp duty for foreigners from 30% to 60%, which came into effect on April 27, could detrimentally impact demand in the city-state in the upcoming quarters.

Despite a more subdued market in 2023, Knight Frank expects a brighter outlook next year. “The recovery in growth in the global economy later this year will aid [super-prime residential] transactions in 2024 with a return to sales in excess of US$30 billion,” predicts Keong.

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