Tarpon Island, a private island in Palm Beach, Florida, has sold for $150 million in May 2024.
CNBC
A version of this article first appeared in CNBC’s Inside Wealth newsletter, a weekly guide for high-net-worth investors and consumers by Robert Frank. Sign up to receive future editions directly to your inbox.
Sales of ultra-luxury homes surged in New York, Miami and Palm Beach, Florida, in the second quarter, even as prices declined in many other parts of the world, according to a new report.
Real estate firm Knight Frank reported that sales of homes priced above $10 million in the second quarter rose 44 percent in Palm Beach, 27 percent in Miami and 16 percent in New York.
New York led the nation with 72 home sales over $10 million, the highest number in two years, according to the report. Miami was second with 55, followed by Los Angeles with 42 and Palm Beach with 36. Los Angeles saw a 29 percent drop in home sales over $10 million, which the report said was mainly due to a new “mansion tax” that levies a 5.5 percent tax on home sales over $10 million.
The quarter’s biggest sale was the $150 million deal in May for Palm Beach’s only private island, reportedly purchased by Australian infrastructure investor Michael Dorrell, according to The Wall Street Journal. In June, a historic mansion on 3.2 acres in Palm Beach sold for $148 million, and in Manhattan, the penthouse at Aman New York sold for $135 million in July.
While demand in many luxury residential markets has slowed from its 2021 peak, ultra-wealthy buyers, fuelled by rallying credit markets, continue to pay record prices for rare luxury properties, according to Knight Frank.
“Significant wealth creation has underpinned the growth of the global super prime home sales market,” said Liam Bailey, global head of research at Knight Frank. “Transformations in markets such as Dubai, Palm Beach and Miami have more than offset the slowdown experienced in more mature markets.”
Across the world’s top 11 luxury housing markets tracked by Knight Frank, sales of homes priced over $10 million fell 4% year-on-year to $8.5 billion.
Dubai topped the world for ultra-luxury real estate, with 85 sales in the second quarter, the report said. Property prices in Dubai have soared as ultra-rich people from Russia, China, Europe and elsewhere move to the city for its favorable tax and regulatory benefits. In 2019, there were just 23 sales in Dubai above $10 million. There were 436 sales in the past 12 months, but the number of sales in the most recent quarter was slightly down on last year and the first quarter, Knight Frank said.
London saw the biggest decline in the world, with sales of homes worth more than $10 million plummeting 47% from last year amid fears of higher taxes on Britain’s wealthy, according to Knight Frank.
The report said ultra-luxury buyers typically pay with cash, but falling interest rates globally are expected to boost sales in the second half of the year.
According to a report from Olshan Luxury Market, 29 contracts were signed in Manhattan last week for properties priced above $4 million, making it the strongest post-Labor Day week since at least 2006.
“Total transaction volumes are likely to increase through 2025 as interest rates fall,” Bailey said.
