Douglas Elliman and Knight Frank released The Wealth Report for 2023. This report studies financial trends of high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UNHWI). It also highlights real estate statistics and projections as related to prime properties, which are generally defined as the top 5% in a given location.
New York Prime Real Estate
New York is considered a super-prime market as the third-most expensive real estate city in the world behind only Monaco and Hong Kong. So far in 2023, it has been the most active super-prime market and is expected to stay atop the list through the end of the year. More real estate sales above $10 million have taken place in NYC than anywhere else. London and New York have seen the most ultra-prime deals over $25 million. We are only just beginning the spring market and we’re seeing positive momentum in the luxury home market and commercial sectors where high-net-worth real estate business is done.
Wealth & Investment Trends
Many individuals in the UHNWI category saw a decline in wealth in 2022—as much as 10%. However, there is optimism in 2023. 69% of wealthy investors expect to see their portfolios grow this year. It may take some shifts in how they manage their investments. 19% of UHNWIs interviewed for this report intend to invest directly into income-producing property. 15% are planning to buy residential property this year. This number is slightly down from 2022, but still strong. In addition, there is expected to be a higher share of cash purchases that will help offset higher interest rates and support prices.
Prime Residential Growth
The Wealth Report also studies the Prime International Residential Index (PIRI 100) to look at real estate and luxury home pricing trends throughout the world’s top markets. The average luxury house price dropped by 5.2% in 2022. At the same time, 17% of UHNWIs bought a home last year, making it the second strongest year on record. 85T of the prime markets experienced positive overall growth in 2022, including New York. We may continue to see a slight decrease in price appreciation as 2023 continues. However, the buyer demand is strong and the activity is there. This should lead to another positive year in New York’s luxury real estate market.
The pandemic has put a stronger emphasis on health and well-being for HNWIs and UHNWIs. Meanwhile, experiential luxury spending continues to rise as we get further away from the worst of the pandemic. Wealthy people will likely spend more on travel and fine dining in 2023. They will also be shifting investments into more alternative assets like real estate, crypto, art and evolving technology. Sustainability is another big keyword moving forward. Sustainable construction techniques will further impact new construction and investment strategies in these prime markets.
We always find it fascinating the study The Wealth Report when it comes out each year. Click here to download it for yourself.
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