A big shift is happening in the luxury home buying market, and it was unexpected by a large amount of investors. Miami’s luxury homes saw a relatively large uptick in sales, while London may be slipping from their spot at the top of the luxury buying list.
Miami’s sales saw an increase of 5.3% year-over-year in the third quarter of 2015, according to the Miami Association of Realtors, and inventory for existing properties also increased.
Miami-Dade County had 258 sales totaling over $1 million per sale in quarter three, which is up from 245 from this time last year. Luxury condos also saw a huge gain in sales, going from 202 to 237 — a 14.8% increase.
“Miami luxury home buyers can purchase a larger home at a better price compared to other world-class global cities,” said Christopher Zoller, the 2015 Residential President of MIAMI. “The strength of the dollar coupled with Miami’s growth as a leading global city is leading more executives, hedge-funders and businessmen to buy luxury properties here. South Florida offers everything a luxury buyer would want: from oceanfront views to world-class art to top-tier amenities.”
Miami is ranked sixth on the list of the most important cities in the world to ultra-high-net-worth individuals (UHNWI), according to the 2015 Knight Frank Wealth Report. Luxury buyers are also generally harder to please; they spend in excess of $1 million more often than not because they have such high expectations. Those in the elite UHNWI group have a net worth of more than $30 million.
The only North American cities that made the top 10 on the Wealth Report were Miami and New York. The top five were London, New York, Hong Kong, Singapore, and Shanghai.
The “Luxury Defined” report of 2015 issued by Christie’s International looked at what $5 million would buy a wealthy person in the biggest cities around the world. In Miami, that $5 million buys a six-bedroom, 6,475-square-foot, custom-built waterfront home.
While Miami is rising on the list of top luxury markets, London may be falling from its top spot. Mayfair’s Mellier building houses the largest flat in the West End market, in the form of a 3,588-square-foot first-floor apartment.
With all of its luxuries, including fine architecture, loft ceilings, a private elevator, and a price of £15.95m, it makes for one of the best “trophy homes” in London. This type of property would have had a bidding war for it 18 months ago at the peak of a mini property boom, but with new rules in place, it will likely be a quiet sale.
The Chancellor has launched initiatives against wealthy homeowners, private investors, and those buying a second home. Because of those initiatives, deals aren’t guaranteed.
George Osborne overturned England’s stamp duty system last December, which gave breaks to those buying homes under £937,000 while raising taxes on those buying properties at over £1.5m. Since this change, luxury buyers have moved away from the London market.
John Taylor, which has been operating in the French market for 150 years, issued a statement saying, “The phones have been lighting up this year with Brits wanting to buy in the Alps and the French Riviera.”