LUXURY REAL ESTATE MARKET TRENDS 2022

Real estate company Coldwell Banker has just released an in-depth report on the 2022 luxury real estate picture around the world. The report points out the prominent trends and growth opportunities of this property market segment thanks to the increase in the number of rich people during the pandemic.

According to data from Wealth-X, individuals with a net worth of $5 million or more increased by 19.8%, or 597,550 people, bringing the total number of wealthy people worldwide to 3,612,730 in 2021. Their total assets also increased by 20.4% to more than $75 trillion - A significant jump from the 2.1% increase in 2020. In the US alone, the number of rich people and total wealth both grew at 24.8% last year from just 8.1% in 2020.

The growth of the affluent class with new lifestyles and changing real estate demands has led to a record growth in the luxury real estate market segment. In 2021, sales of single-family houses in the luxury property segment, which accounts for 10% of the overall real estate market, increased by 14.5% compared to 2020, while the price increased by 20.3%. Row houses’ sales increased by 29.6% and prices increased by 16.6%.

According to Coldwell Banker, a number of emerging trends in 2022 will reshape the property market both in terms of real estate development models, investment activities and customer experiences.

1. Comebacks of international property investors 

International buyers' interest in luxury real estate will rebound as travel restrictions are eased and profit expectations soar due to tight supply.  They will prefer finished houses with plenty of space and privacy.  The suburban areas will become the new attraction for buyers.

2. The number of rich people buying second homes is on the rise

According to Coldwell Banker, the number of rich people buying second homes is on the rise.  About 70% of individuals with $5 million or more own two or more properties.  At the same time, more and more of them are buying houses for leisure and relaxation which accounts for about 32% of the total rich people in 2021 compared with the 23% level in 2020.

Luxury real estate market trends 2022 / ph: pexels 

Particularly, the line between the first house and the second house is gradually blurring, because many wealthy people choose to live in a second home to both work and relax or decide to buy more real estates to add to their investment portfolios.

3. Luxury real estate can be everywhere

The opportunity to work from home, climate change considerations and access to desirable places to live make it easy for the rich to expand their house buying options in many cities in many countries even in second-tier cities.

In the US, second-tier cities such as Denver, Boise, Sacramento, San Antonio, Raleigh and Salt Lake saw luxury real estate prices increasing by 19-36% in 2021. In the urban core region, prices are also slowly recovering.  According to the report, sales in Manhattan increased 101.7% compared to 2020.

4. Green real estates

Sustainable trends are spilling over into the luxury real estate market.  Millennial property buyers are on the hunt for houses that incorporate personal health and environmental factors into their design with prices 10-25% higher than conventional properties.

More and more property buyers are concerned about issues of natural disasters, climate change or extreme temperatures as the earth warms.  Green cities like Portland, San Francisco and St.  Paul in the US are attracting interest from wealthy real estate buyers who want to live in environmentally friendly areas.  For this group of buyers, luxury is made up of functionality, harmony with the environment and convenience of use.

LUXURY REAL ESTATE MARKET TRENDS 2022