In a promising shift, Australia’s real estate market has begun to regain traction. Notably, the Sydney property market has risen to the top ranks in terms of price growth, according to recent price indexes.
Mirroring this development, the international super-prime residential market has also shown signs of recovery. A combination of inflation, rising interest rates, and conflict had initially sent both markets into a slump. However, evidence of a strong recovery phase is now emerging.
The latest Global Super-Prime Intelligence report from Knight Frank underlines this trend. Sydney has made an impressive leap to the ninth position worldwide in terms of the number of super-prime sales within the past year. The report, which scrutinizes residential sales of US$10 million and above across 12 markets, indicates that Dubai has also made significant strides. Its contribution to overall sales skyrocketed from a mere 2% to a whopping 17%, outpacing London by three percentage points.
A Glimpse into the Prestige Market
The first quarter of 2023 saw a significant 11% surge in super-prime sales when compared to the last quarter. Over the past 12 months, residential sales volumes amounted to an impressive $30.2 billion. However, the numbers still fall below the market zenith reached in 2021, with 2,298 sales representing a 28.4% drop to 1,645. In terms of volume, the market dipped 26% from its peak of $40.7 billion but is still a robust 62% higher than the pre-pandemic levels of 2019.
During the first quarter of 2023, the 12 crucial global markets monitored saw 417 sales. Dubai led the pack with 88 transactions, followed by Hong Kong with 67, New York with 58, Los Angeles with 46, and Singapore with 37. The demand for luxury architects in Sydney surged as a healthy cash injection saw an influx of new developments.
Sydney Overtakes Paris in Property Sales
In Q1 2023, Sydney witnessed 10 super-prime settled sales exceeding US$10 million, which was more than the number of sales recorded in Paris and Orange County, who both reported three sales each.
Sydney tallied 76 super-prime sales over 12 months ending March, taking the ninth spot, leaving Geneva (63), Orange County (54), and Paris (26) in its wake. The overall value of Sydney’s super-prime sales during this period stood at US$1.233 billion, with the average sale price at US$16.2 million.
While the number of global super-prime sales increased in Q1, the overall value of these sales, amounting to US$7.2 billion, marked a four percent decrease from the last quarter. The highest average super-prime sales were in Geneva at $23.8 million and London at $20.4 million.
Erin van Tuil, Knight Frank’s Head of Residential in Australia, noted that over the past half-decade, Sydney’s super-prime market has evolved significantly. This maturation will likely lead to a greater influx of international buyers, who are one of the primary global forces driving super-prime sales.
According to van Tuil, more affordable markets generally attract domestic buyers. However, pricier markets underscore the role of international investment. Australia’s prestigious residential market, she noted, has seen a slower return of international buyers since border reopening when compared to the US, Singapore, and the UK. Yet, over the recent months, there has been a noticeable increase in inquiries from overseas buyers, a trend that is expected to accelerate as we move into spring and summer.
A majority (59%) of Australia’s ultra-high-net-worth individuals (UHNWIs) prefer the United States when considering buying a new home overseas. This statistic is based on the most recent Attitudes Survey conducted by Knight Frank. Conversely, a mere seven percent of American UHNWIs expressed interest in buying Australian property when the survey was conducted. However, van Tuil expects these numbers to rise due to the enhanced value proposition linked with a strengthening currency.
Despite the pandemic, super-prime residential property has maintained its appeal for affluent buyers, thanks to an uptick in quarterly sales. Michelle Ciesielski, Knight Frank’s Head of Residential Research in Australia, confirms this trend. She pointed out that the super-wealthy were actively seeking holiday homes during the COVID lockdowns in 2021, contributing to a peak in transactions. However, a limited availability of premium properties has recently become a hurdle for transactions worldwide, including Sydney. Tellingly, the increasing demand for buyers agents in Sydney has been indicative of the increasing competition and stock restraints on the market.
While 2023 is expected to see more muted conditions compared to the 2021 peak, with global transactions likely to total $25 to $27 billion for the full year, a rebound in the global economy’s growth later this year should stimulate transactions in 2024, pushing sales back up over $30 billion.