Ultra luxe real estate prices in Miami could rise at the second-fastest rate in the world this year

Worldwide, price growth is slowing for the prime property market

Apr.April 24, 2019 12:30 PM

Liam Bailey and a portion of the Miami skyline (Credit: iStock)

Ultra luxury real estate prices could rise by 5 percent this year in metropolitan Miami, the second-fastest growth rate among 20 global cities, according to Knight Frank and Douglas Elliman.

Knight Frank, a global real estate consultant, and brokerage firm Douglas Elliman forecast that prime property prices will rise 6 percent this year in four of the 20 global cities – Berlin, Capetown, Madrid and Paris – and will decline in five of the cities, from 2 percent in Dubai to 10 percent in Hong Kong. They defined prime residential property as “the most desirable and most expensive property in a given location, generally defined as the top 5 percent of each market by value.”

In their annual wealth report, presented on Tuesday in Palm Beach, Knight Frank and Douglas Elliman reported that prime property prices in Miami grew 3.3 percent last year, compared to 2017. On average, however, prime residential property prices around the world increased just 1.3 percent last year, the slowest rate of appreciation since 2012.

According to the report, about 33,000 millionaires reside in the Miami metropolitan area, where prime property appreciation is also propelled by Florida’s status as a low-tax state.

The report also included Delray Beach in a group of 18 cities around the world that may emerge as prime residential hotspots in the future, noting that Delray “offers relative value and a more relaxed feel than its coastal neighbors” Fort Lauderdale and Palm Beach.

Worldwide, however, Knight Frank and Douglas Elliman foresee slower growth in prime property prices as central banks end easy monetary policy: “As we learn to live without the ultra-low interest rates that have supercharged real estate markets globally since 2008, lower price growth is an inevitable consequence of the shift in monetary policy.”

Liam Bailey, partner of Knight Frank and global head of research, said “the beginning of the end of ultra-low interest rates … is beginning to put pressure on [residential property] prices in many markets.”

That is one reason why “wealthy investors are focusing increasingly on tangible assets” such as wine, art and automobiles, Bailey said during Tuesday’s presentation.

But among extremely wealthy individuals, the wealth report by Knight Frank and Douglas Elliman also found that “there is still a belief that owning property is a long-term store of value.”

According to the report, 29 percent of ultra-high-net-worth individuals are considering the purchase of a second home this year. The report defines ultra-high-net-worth individuals as those with a net worth of $30 million or more (excluding the value of their residences). The report also forecast the global population of ultra-high-net-worth individuals will increase by 43,000 over the next five years.

Related Articles

Jay Parker with a rendering of Forte (Credit: Two Roads Development/Alpha Blue Ventures)

Boutique condo project in West Palm Beach launches sales

Cheyenne Lutek (Credit: Miami-Dade County Dept. of Corrections, iStock)

NY real estate agent arrested during SOBEWFF

From left: Mick Duchon, Eloy Carmenate, Tara West, Alex Sapir, Oren Alexander, Jay Philip Parker, Dean Bloch

Movers & Shakers: Sapir announces sales team for Surfside project, Franklin Street taps retail head & more

Jay Parker and a rendering of CocoWalk

Douglas Elliman, Bluemercury among new tenants at CocoWalk

Howard Lorber and Barry Zubrow with unit 1601 at The Bristol (Credit: Getty Images)

Howard Lorber flips condo at the Bristol to investment banker Barry Zubrow

Nirka Burns Padilla and Martin Conroy 

Movers & Shakers: Palm Beach broker leaves William Raveis for Douglas Elliman & more

South Florida skyline (Credit: iStock)

Resi sales rise throughout South Florida in Q4: Elliman

From left: Andrea and Renzo Rosso

Diesel family dishes on Wynwood condo project