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Barnes unveils its study on luxury real estate behaviors, observing that Miami is the most sought-after city for high net worth individuals.
Barnes and its annual “Barnes City Index” survey observes that in the context of a faster-than-expected economic recovery, the ranking of major international cities has once again been turned upside down: Miami, Austin, Tokyo, Geneva and Paris make up the Top 5.
“In 2022, the Barnes City Index has never been so varied, featuring such meteoric advances as Madrid, Moscow and Prague, as well as traditional stalwarts like London, New York and Tokyo. This reflects the changes brought about by the health crisis and above all the ability of wealthy individuals to adapt“, comments Thibault de Saint Vincent, Chairman of Barnes.
The international luxury real estate network analyzes each year a very specific segment of personalities and families. These are the HNWI or UHNWI for “High-Net-Worth Individuals” and “Ultra High-Net-Worth Individuals“. These individuals have assets of between one and thirty million dollars (or more). Luxury real estate accounts for 5.4% of their wealth and most own at least one (if not several) vacation homes in addition to their primary residence, not to mention the pied-à-terre they have chosen to purchase for themselves or their children in their preferred major cities.
More and more wealthy and younger
Driven by entrepreneurship and stock market performance in technology, health care and communications, the recovery from the health crisis has been stronger than expected, and the UHNWI are a reflection of this. Indeed, the population of ultra-high-net-worth individuals grew by 5.5% in one year to 295,450 individuals, while their overall wealth increased from $32.2 billion to nearly $35.5 billion.
Generation Z (individuals born between 1993 and 2010) is taking hold. By 2025, they will represent 10-15% of UHNWIs, up from 4% in 2019. Generation Y (1978-1992) will become the majority, accounting for 45-50% of ultra-high net worth individuals. Generations Y and Z, one of whose main traits is a high level of environmental awareness, will help change the face of the market: currently the leading consumers in the second- or even third-hand luxury market, they are also the first to willingly commit to costly renovations, including energy retrofits. By paying attention to the origin of raw materials and the ecological weight of materials, they will contribute to an ethical and eco-responsible footprint in the world of luxury real estate.
Barnes City Index
At the top of the Barnes City Index are five cities that have convinced investors of both their attractiveness and their fundamentals: Miami, which was already a surprise in the Top 2020 ranking where it was 4th, takes 1st place, followed by Austin, which jumps from 24th to 2nd place. Tokyo remains in a good third place, followed by Geneva, which moves up from 8th to 4th place, and Paris, which moves up from 7th to 5th place.
“Old Europe has regained its former status, with five cities in the Top 10 (Geneva, Paris, London, Madrid, Stockholm), showing a return to the traditional safe havens that were, before the health crisis, the great regulars of the Barnes City Index,” explains Thibault de Saint Vincent. The same is true for New York and Toronto, which are also making a comeback. Zurich, which held the top spot in 2021, has fallen to 11th place, a victim of the overheating of its real estate market, as have Stockholm and Copenhagen, which have dropped out of the Top 5.
Miami was able to ignore the constraints of the health crisis and prove that its new image as a flourishing metropolis was not a mirage. The sunny climate, the beauty of the beaches of Biscayne Bay, the very advantageous tax system with no income tax for individuals and a corporate tax limited to 5.5%, among others, are all assets that have convinced HNWIs and large companies. It is also the city in the United States with the largest number of new residents in 2021, 2nd in economic growth, 1st in start-ups (9.39% of the active population) and 4th in the country in terms of school supply. Home to no less than 1,000 multinationals and with an average age of 38.2, Miami is a bustling global city.
“Instead of putting the city to sleep, the Covid-19 epidemic has only highlighted Miami’s strengths, making remote work widespread and hedge fund moves much more frequent. Known as the Gateway to the Americas, Miami is open to Europe, Asia and the Middle East,” adds Thibault de Saint Vincent.
With newcomers arriving, strong rental demand is bound to entice investors. Buyers, on the other hand, are turning to newer neighborhoods and those with proven rental capacity, particularly those in Edgewater (+40% for rents), the downtown area undergoing renovation, and Brickell (+30%). Homes in Miami Beach, Coconut Grove, Key Biscayne, and Coral Gables remain stable with a large increase. The most sought-after properties are oceanfront villas with pontoons on secure private islands and penthouses with panoramic views.
Austin is in second place. Luxury real estate here has seen prices rise more than New York and major California cities in the first three quarters of 2021: the Austin market starts at $2.34 million (€2.12 million), up 33 percent from 2020 and 44 percent from 2017, according to The Wall Street Journal. High-end homes, which took nearly four months to sell five years ago, are now sold in less than two months. In fact, the median home price jumped $100,000 in six months last year.
The downtown area, the neighborhoods of Barton Hills, Barton Creek, Zilker, and Rosedale, which are both lively and upscale, are seeing their prices soar, while villas or penthouses along the banks of the Colorado River, villas in gated communities, and large condos with a view of the downtown area are snapped up like hotcakes. After Tesla and Oracle, which have already set up shop in Austin’s Silicon Hills, Apple plans to open a $1 billion campus there in 2022. While waiting for the number of transactions to stabilize, Austin should continue to grow and investments should increase…
Paris, the city of light
Paris is back in the top five, ahead of London and New York. Thibault de Saint Vincent explains, “After having stayed the course during a risky year in 2020, the City of Light has proven its refuge value, making 2021 a record year, with increases of 5 to 10% for quality properties located on high floors in beautiful luxury buildings and for properties with terraces and gardens. Those with defects and nuisances, on the other hand, have fallen by 10 to 15 percent.”
Investors have also recognized the renewed attractiveness of the capital, with the development of the Grand Paris Express and the 2024 Olympic Games. Hauts-de-Seine is also a strong performer in the prestige real estate market, thanks to increased demand for larger areas and outdoor spaces, attracting Parisian buyers looking for a better quality of life. For the same reasons, the Yvelines has seen its popularity confirmed and even accelerated in 2021.
Read also > THE HUGE SHAPE OF LUXURY REAL ESTATE
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Barnes unveils its study on luxury real estate behaviors, observing that Miami is the most sought-after city for high net worth individuals.
Barnes and its annual “Barnes City Index” survey observes that in the context of a faster-than-expected economic recovery, the ranking of major international cities has once again been turned upside down: Miami, Austin, Tokyo, Geneva and Paris make up the Top 5.
“In 2022, the Barnes City Index has never been so varied, featuring such meteoric advances as Madrid, Moscow and Prague, as well as traditional stalwarts like London, New York and Tokyo. This reflects the changes brought about by the health crisis and above all the ability of wealthy individuals to adapt“, comments Thibault de Saint Vincent, Chairman of Barnes.
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Barnes unveils its study on luxury real estate behaviors, observing that Miami is the most sought-after city for high net worth individuals.
Barnes and its annual “Barnes City Index” survey observes that in the context of a faster-than-expected economic recovery, the ranking of major international cities has once again been turned upside down: Miami, Austin, Tokyo, Geneva and Paris make up the Top 5.
“In 2022, the Barnes City Index has never been so varied, featuring such meteoric advances as Madrid, Moscow and Prague, as well as traditional stalwarts like London, New York and Tokyo. This reflects the changes brought about by the health crisis and above all the ability of wealthy individuals to adapt“, comments Thibault de Saint Vincent, Chairman of Barnes.
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