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“Real estate is cheap.” It was a surprising comment to hear in response to a talk I gave recently in New York on luxury residential markets — especially given I was discussing Manhattan apartments, which were coming in at prices big enough to move the dial in chancellor Rachel Reeves’ upcoming spending review.
To be fair, my fellow panellist had a point, as he explained: “You buy an apartment for $35mn and think it’s expensive, but what about the $100mn artworks on the walls, or the $50mn you’ve just dropped on a yacht that begins depreciating the moment it touches the water.”
While it’s often the same people buying these luxury assets, demand does not always move in the same direction. At the same time, trends in one market can shape demand in another.
In the art world, despite record prices being paid for wall-mounted bananas, the market is experiencing something of a downturn. Last year, the total volume of sales above $10mn totalled $1.2bn — a big figure, but it’s 70 per cent below where it was in 2022. Some sub-markets, however, have boomed. With public collections working to diversify, women artists are in huge demand, and few more so than the female Surrealists, with auction sales volumes up 167 per cent over the past year. Against the backdrop of a tight market for super-prime artwork, Leonora Carrington’s masterpiece “Les Distractions de Dagobert” sold last year for $28.5mn.
The superyacht market has also dipped in the past year. In 2024, total sales for $10mn-plus yachts fell to $3.6bn, down 28 per cent on 2023’s total. Despite the decline, some segments are growing, and none more so than the 100 metre-plus market. But here lies a problem: many of the world’s exclusive yachting destinations are struggling to accommodate larger vessels. As a result, yacht owners looking to invest in waterfront residential property are having to prioritise access to world-class berthing facilities, an asset that has become almost as important as the house itself, and a requirement that is limiting choice for luxury home markets.
If buyers solve their yacht problem, their private jet might cause another headache. The global super-prime jet market totalled $22.7bn in 2024 — and this is a growth market, up 7 per cent on 2023. But the biggest growth market is long-range jets, accounting for 37.5 per cent of the US fleet right now. OK, so you might be able to commute between Miami and your European second home, but the need for a 2,000-metre runway will weigh on your choice of destination, especially if you are dreaming of a Greek island or an Alpine retreat.
The global super-prime market for residential property hit $36.4bn in 2024, across 12 major global markets, with 2,018 sales between markets such as London, New York, Dubai and Singapore. This is 7 per cent above 2023’s total, although down 13 per cent on the total seen in 2021 — the peak of the post-Covid market. Interestingly, super-prime sales are well above the pre-Covid trend, aided by the arrival of one particular market.
Go back to 2019 and there were three markets that dominated their respective time zones for luxury home sales: New York, London and Hong Kong. Over the past five years, Hong Kong waned as European and US expats reduced their demand. Singapore waxed briefly as the key Asian wealth hub, but 60 per cent stamp duty levies on foreign buyers have slowed that market. While London held its own in Europe, New York suddenly found itself losing demand to Miami and Palm Beach as the US economic centre of gravity shifted to Florida.
However, the big growth market is Dubai, accounting for one in five of all super-prime sales across our basket of 12 markets last year. While artworks might need substantial UV protection if they are hung on the walls of the city’s new apartments, and yachting is more limited than in Europe or the Caribbean, access to the world’s busiest international airport means there are at least few restrictions on your ability to park your jet.
But returning to my panellist’s challenge, is it cheap? Well, while luxury prices in the city have risen 147 per cent over five years, they are still less than half of those seen in Manhattan.
Liam Bailey is global head of research at Knight Frank and author of Knight Frank’s Wealth Report
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