Super-prime home sales in 1Q2023 reflects a sustained ‘desire for luxury housing’, says Knight Frank.Global sales of super-prime homes recorded an 11% q-o-q increase in 1Q2023, with 417 such transactions valued at US$7.2 billion, according to Knight Frank’s Global Super-Prime Intelligence report. At the same time, the total sales value fell marginally from US$7.5 billion in 4Q2022 to $7.2 billion in 1Q2023.

Despite economic headwinds, market activity remained resilient, with 1,645 super-prime residences sold across the 12 key markets tracked by Knight Frank. This is 28.4% lower than the recent peak of 2,298 sales registered in the year ending December 2021.

Dubai remains the most active super-prime residential market, with 88 homes sold at over US$10 million in 1Q2023 for a total sales value of US$1.66 billion, compared to 75 transactions (US$1.4 billion) in the previous quarter. Hong Kong came in second, with 67 homes sold for US$988 million.

Singapore came in fifth place, recording 37 super-prime residential transactions worth US$579 million. This is an increase from the 23 homes sold in 4Q2022 for a total of US$409 million, with prices averaging at around US$15.6 million.

Knight Frank observed a steady growth in Dubai’s importance in the global super-prime residential market. In 2019, the city accounted for 2% of all super-prime sales across key markets tracked. By the end of the year ending March, this proportion had swelled to 17%, making it the largest contributor to global super-prime home sales, followed by London (14%) and New York (13%).

The market is expected to remain subdued this year, with total super-prime home sales predicted to be between US$25 billion and US$27 billion. This is significantly lower than the US$32.6 billion recorded across 1,763 transactions in 2022.

However, brighter days are likely ahead in 2024 with a return to sales in excess of US$30 billion. Changes in tax measures in select markets, such as the stamp duty rule relaxation in Hong Kong, are expected to have an impact on buyer behaviour. On the flipside, Singapore’s hike in additional buyer’s stamp duty for foreigners from 30% to 60% could detrimentally affect demand in the city-state.

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Despite the current economic headwinds, there remains a strong desire for luxury housing worldwide, with bright spots in London, New York, Los Angeles, Singapore and Hong Kong. Cross-border demand is also being boosted by Hong Kong’s reopening and increased tourist flows. These factors indicate a positive outlook for the super-prime property market in the long term.

Nicholas Keong, head of private office at Knight Frank Singapore, remarks: “Our latest data confirms the arrival of Dubai as a critical part of the world’s wealth landscape, with its sales boom helping to propel prime prices higher by 149% since the beginning of 2020.”

He adds that the uptick in activity in 1Q2023 reflects an ongoing desire for luxury housing despite the uncertainty around global inflation and the rising interest rate environment. Despite a more subdued market in 2023, Knight Frank expects a brighter outlook next year.