Over 200 member brokers of the elite, invitation-only organization were interviewed on key topics impacting the international luxury residential real estate market, offering an insider’s look
NEW YORK, October 5, 2022 /PRNewswire/ — Research from more than 200 member brokers of Luxury Portfolio International® (LPI), the world’s leading luxury residential real estate network, provides important global insight into what matters most to the the rapidly changing ultra-luxury residential real estate market – and what’s on the horizon for 2023.
Title The business of luxury real estatethe study surveyed a cross-section of leading residential real estate agencies, their managers, and top-performing agents.
In all markets, real estate professionals recognize that COVID has driven an unprecedented but unsustainable market, with many large municipalities experiencing generally low levels of available inventory – in some cases as low as barely a month. inventory available. A “stable” luxury market will have 12 to 18 months of available inventory.
Based on the fact that 2020, 2021 and the first part of 2022 represented an industry anomaly, a majority of survey participants remain optimistic as markets stabilize, noting that, for the most part, there is no there is no “overabundance” of inventory. Rather, the market is simply correcting itself from historically low levels of available inventory.
Key findings from the study include:
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63% of Dealer Members expect stable or growing sales throughout 2022
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79% expect home values to be flat or up in their respective markets for the remainder of 2022
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95% said they are moderately to highly optimistic about their overall market over the next 12 months
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Rising inventory led to an increase in days on market, leading to price reductions in some markets and, for the first time since the pandemic, a slight shift to a buyers’ market
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Location, size and updated amenities are the most common factors in luxury home sales right now; new construction and ready to move in remain very attractive features for luxury buyers
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Additionally, demand continues for outdoor spaces, views and trophy locations, and in some markets the highest demand for luxury condominiums since the pandemic slowed those markets.
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Although the study indicated that the recent decline in sales and the increase in inventories were necessary to achieve market stabilization, the study also noted that external geopolitical issues – such as the war in Ukraine — lead high-end consumers to evaluate when and where they make their purchases
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While 45% of LPI members expressed concern about the impact rising interest rates will continue to have on the luxury residential real estate market through the remainder of 2022, a complementary survey by the company research on affluent consumers from the United States revealed a growing desire among affluent consumers to buy luxury homes
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Importantly, the exponential growth of the luxury residential real estate market has been achieved with little (if any) impact from international buyers due to the travel shutdown due to COVID; members surveyed, particularly in cities where the international shopper is a key factor, noted that they have started to see the return of this consumer
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International buyers represent 18% of total luxury activity for 79% of member companies, so the fact that sales have continued to be so robust with this important sector mostly absent since the pandemic communicates the viability of the luxury sector of the market.
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As travel restrictions ease, the study reveals that these international buyers are looking for privacy, security, high-quality private schools, better infrastructure (e.g. medical facilities), safer investments and cultural improvements.
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A strong business community and a reputable government investing in its infrastructure were noted by member companies as another key factor in the luxury residential realm.
According to the study, members also believe rising interest rates are likely to negatively impact luxury real estate sales throughout 2022; however, complementary consumer research by LPI showed a 55% year-over-year increase in the likelihood of buying luxury real estate in the 90 days from July to August (14, 7% versus 18.2%).
Thus, the buyer of luxury real estate remains in the market despite the rise in interest rates. That said, they also acknowledge that prices are “high right now”, with 56% describing them as “more expensive than they should be”. Also demonstrating their mindset: 76% of likely buyers admit that “even in times of personal financial uncertainty, I buy high-quality products.”
Another point to remember is that tourist boards and similar organizations are playing an increasingly critical role in the development and marketing of luxury real estate. Drawing this type of market sector is a win-win situation for most communities, and the efforts of these organizations and cooperation with luxury brokers are increasing.
“This research in the field and in the trenches provides unprecedented access to what many of the most successful luxury real estate agents in the industry are currently seeing – and all during one of the most extraordinary times that the industry has ever known,” said Mickey Alam Khan, President of Luxury Portfolio International®. “We’re fortunate to gather crucial insights from agents in high-profile markets, providing a new, first-hand insider perspective on how key trends are shaping the habits of affluent buyers and sellers. This exceptional content tells us about the implications these fluctuations are expected to have over the coming year.”
To access the full report, please visit the following link: https://www.luxuryportfolio.com/reports
ABOUT THE INTERNATIONAL LUXURY WALLET® (LPI)
Luxury Portfolio International (luxuryportfolio.com) is the world’s leading network of luxury real estate brokers and their best agents, offering unparalleled marketing and intelligence services around the world. The network currently has over 245 members in over 45 countries. It is the luxury arm of The Leading Real Estate Companies of the World®, the global network of the best independent real estate companies, with 550 companies and 136,000 salespeople in more than 70 countries. Last year, network members participated in more than 1.2 million global transactions. LPI attracts a global audience of visitors from over 200 countries/territories each month and markets over 50,000 luxury homes annually. Well connected.™
Contact: pr@luxuryportfolio.com
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SOURCE Luxury Portfolio International
