The pulse of luxury residential real estate.
“The pandemic recalibrated interest in larger, greener properties, secondary cities, and geographies with favorable tax and emigration policies. These preferences are likely here to stay for the foreseeable future” – Bradley Nelson, chief marketing officer for Sotheby’s International Realty.
The global wealth is forecasted to grow and pandemic trends are expected to persist in the year ahead, according to the inaugural 2021
Luxury Outlook report issued by Sotheby’s International Realty. The report examines high-end residential markets across the globe in the wake of the Covid-19 pandemic. The comprehensive report provides insight into the world’s top primary and secondary markets and the anticipated wealth trends that will drive discretionary investment in the coming months.
With priorities shifting toward larger homes with special amenities, including “Zoom rooms,” multiple offices and workspaces, and an increased interest in sustainable homes with wellness and technology features, the Luxury Outlook highlights new spending habits and home buying trends.
“As a leader in luxury real estate, it was important for us to analyze trends emerging from the most unparalleled year in modern history,” said Bradley Nelson, chief marketing officer for Sotheby’s International Realty. “The pandemic recalibrated interest in larger, greener properties, secondary cities, and geographies with favorable tax and emigration policies. These preferences are likely here to stay for the foreseeable future, and it was important for us to provide a resource to those looking to navigate the months ahead.”
“Luxury real estate is going to mirror what is happening generally in wealth trends.” – Dr. Nannette Hechler-Fayd’herbe, Head of Global Economics & Research, Credit Suisse.
The Sotheby’s International Realty 2021 Luxury Outlook report was compiled by surveying Sotheby’s International Realty agents who transact in the US$10M+ price category around the world. This information was complemented by gathering supporting data from other leading industry experts, including Credit Suisse, the Luxury Institute, and the National Wellness Institute, in addition to art and luxury experts at Sotheby’s, the famed auction house.
In the near term, savvy buyers will likely continue to strike deals in big cities, particularly for condos; and even in dense urban cores, general tastes will continue to gravitate toward larger, quarantine-friendly homes. Smaller units will probably struggle to sell, and developers may readjust plans for studios and one bedrooms in favor of more-spacious offerings.
City dwellers are moving in droves to once sleepy sub-urban towns. Baby boomers are retiring to sunnier locales, while remote work has allowed millennials to ascend the housing ladder in smaller, more affordable cities. The affluent have invested in second or third homes and large compounds to welcome back adult children, and even fulfilled long-held dreams to own a private island – or conversely, have sought investment opportunities in high-cost financial capitals where deals were suddenly available.
People who’s only ever considered condos were drawn to the autonomy and privacy of townhouses, and amenities one considered niche became must-haves, from pools to tennis courts.Sustainability is likewise emerging as a prime consideration in luxury real estate, with buyers looking to integrate greener living in their homes and lifestyles.
Luxury Real Estate Trends of the Year, according to Sotheby’s International Realty:
- Luxury buyers demand outdoor space and convenience;
- Wealth will settle into seasonal towns and secondary cities for the long term;
- The big city is not dead;
- Collectible (art, classic cars, gems, watches, fine wines, musical instruments) returns;
- Demand for sustainability to define the future of luxury goods (and houses);
- Greener homes are the future;
- Millennials becoming a growing force in luxury homes;
- Wellness to take center stage after global health crisis.
- Home buyers won’t easily forget the pandemic – when more was more;
- Faced with uncertainty, consumers favor tried-and-true luxuries;
Key findings featured in the Sotheby’s International Realty 2021 Luxury Outlook include:
- 63% of respondents said they expected luxury home prices to rise over the next three years;
- Trophy home buyers remain heavily concentrated in the U.S. and China;
- By August 2020, high-net-worth individuals’ collective wealth had grown 37% from March 2020, according to a study by Wealth-X;
- The most important amenities for luxury buyers today are private outdoor space or nearby parks and additional square footage for remote work and education;
- By 2025, millennials could account for 45% of luxury goods sales.