Like markets in many parts of the world, luxury residential real estate had a good year in 2020. The annual Knight Frank Prime International Residential Index reveals a strong trend in prices and the preference for resort and coastal areas together with more space. Australasia and North American locations dominated the rankings.
Luxury residential real estate prices
The Knight Frank Prime International Residential Index (PIRI) tracks the market in 100 locations worldwide, all favourites with ultra-high net-worth individuals (UHNWIs). The Index found that in 2020 prices for luxury residential property went up by 1.9%.
Last year’s increase confirms the upward trend in values for luxury homes. The PIRI rose by 1.8% in 2019. The 2020 Index includes 5 locations with double-digit price hikes and 29 where values dropped.
Top performers in high-end property
The city with the highest increases in 2020 was Auckland where luxury homes saw a price rise of 17.5%. Three Asian cities completed the top four rankings: Shenzhen with 13.3%, Seoul with 11.7% and Manila with 10.2%.
However, despite the Asian prevalence at the top of the Index, Australasia and North America were the top performing regions. Prices in North America went up by 6.3% and those in Australia and New Zealand by 4.9%.
Non double-digit prices for luxury homes
At the opposite end of the table is Buenos Aires where high-end residential property prices tumbled by 12%. Cape Town fared almost as badly with a drop of 9.2%, followed by a 7.3% decrease in prices in Bangkok.
Many of the other price drops were marginal, however, and the vast majority of locations saw a rise in values. This is the case with the two Brazilian cities featured in the Index. Luxury residential real estate in Sao Paolo went up by 3.7% in 2020 and by 1.6% in Rio de Janeiro.
New trends for luxury homes
One of the biggest revelations in the 2020 PIRI was the shift in trends for location and type of property. In the survey, 56% of UHNWIs showed a preference for luxury real estate in resort and coastal areas. Fresh air and nature were the watchwords for prime residential in 2020.
As the Index points out, “Palm Beach was a key super-prime hotspot in 2020”. The Florida resort saw 20 sales of luxury real estate with a price tag of over US$20 million, up from 10 in 2019.
The rest of the world showed a similar pattern. “Prime European second homes performed strongly in Provence, the wider Côte d’Azur and Lake Geneva,” reported the PIRI.
Beach property and plots favourite
The same trend appeared in Northeast Brazil where prime land plots saw an uptick in sales and prices during 2020 as buyers opted for building tailor-made homes with more outdoor space. Demand for luxury property also rose in the area with the market experiencing a shortage of second homes by the end of 2020.
Based on the trends in the 2020 PIRI and the figures for the start of this year, prime residential real estate looks set for further prices rises in 2021.