The wealthy of the world set to spend
Bargains on rise for the rich in stable regions but question marks abound
Los Angeles, San Francisco and London.
“Real estate buyers look for a stable political system and they’re not finding that right now in Hong Kong,” he says.
Miami’s high-end condo market, on the other hand, is poised for something of a comeback this year, helped by US President Donald Trump’s tax overhaul, which capped deductions on state and local taxes, according to Knight Frank.
While South Americans have pulled away in recent years as the strengthening dollar added to the cost of buying in the US, domestic buyers are making up for it: Florida, which has no income tax, is drawing wealthy buyers from hightax states like New York and New Jersey. Those buyers will push up Miami high-end prices by 5% this year, Knight Frank says.
Los Angeles’s “bright spot” is in the $2 million (R29m)to $10m range.
The city’s market, from Beverly Hills to Bel Air, will show moderate price increases this year – amounting to about 2%. It might have been higher but for a pullback of foreign buyers, particularly Chinese who face restrictions on moving money abroad. That’s tended to weaken the highest end of the market.
California’s wildfires, including one in 2018 that tore through Malibu, have also hurt by pushing up the cost of insurance, according to Sotheby’s White.
Demand has been particularly weak for properties above $10m. Homes priced below $10m have a more bullish outlook, according to Knight Frank.
“LA, at present, is more of a domestic market,” White says.
Central London, where prices fell 3% in the 12 months to November, will stabilise slightly this year as the fate of Brexit becomes clearer, says Tom Bill, Knight Frank’s head of London residential research. Prices are likely to rise by about 1%, according to Knight Frank research, now that the Conservatives have won in a landslide. “Once the Brexit deal is completed, we forecast rising momentum across all markets, with price growth reflecting this from 2021 onwards,” the company’s 2020 forecast report says.
The ratio of shoppers to available listings reached a decade high in September, a sign of rising demand. The decline in the pound combined with years of decreases in property prices are attracting foreign buyers again, Bill says.
“This year we could see the disorderly Brexit risk recede. If that is the case, there’s an awful lot of pent-up capital ready to buy in London, and that will translate into higher levels of activity.” – Bloomberg