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Sales of $10 million homes surge in Palm Beach and New York

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2 days ago

September 17, 2024

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Sales of $10 million homes surge in Palm Beach and New York

Tarpon Island, a private island in Palm Beach, Florida, sold for $150 million in May 2024.

CNBC

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.

Sales of ultra-luxury homes surged in New York, Miami and Palm Beach, Florida, in the second quarter, even as they fell in much of the rest of the world, according to a new report.

The number of homes that sold for $10 million or more in the second quarter jumped 44% in Palm Beach, 27% in Miami and 16% in New York, according to a report from real estate firm Knight Frank.

New York led the U.S. in $10 million-plus sales, with 72, its highest total in two years, according to the report. Miami came in second with 55, followed by Los Angeles with 42 and Palm Beach with 36. Los Angeles saw a 29% decline in $10 million-plus sales, due largely to the new “mansion tax,” which adds a 5.5% charge on homes sold for over $10 million, the report said.

The biggest sale of the quarter 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 3.2-acre estate in Palm Beach sold for $148 million, while in Manhattan, the penthouse of the Aman New York was sold for $135 million in July.

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While demand in many top luxury markets is slowing from the 2021 peak, ultra-wealthy buyers continue to pay record prices for rare trophy properties, boosted in large part by rising financial markets, Knight Frank said.

“Substantial wealth creation has supported the growth in the global super-prime sales market,” said Liam Bailey, global head of research at Knight Frank. “The transformation of markets like Dubai, Palm Beach and Miami has more than offset the slowing experienced by some more mature markets.”

Globally, in the 11 top luxury markets that Knight Frank tracks, sales of $10 million-plus homes fell 4% over last year to $8.5 billion.

Dubai leads the world in ultra-luxury real estate, with 85 sales in the second quarter, the report said. The city has seen a stratospheric rise, as the ultra-rich from Russia, China, Europe and other areas moved to Dubai for its friendly tax and regulatory regimes. In 2019, Dubai had only 23 sales over $10 million. In the past 12 months, it has had 436 sales — although sales in the most recent quarter fell slightly from last year and the first quarter, Knight Frank said.

London saw one of the largest declines in the world, with sales of $10 million-plus homes plunging 47% from last year on fears of higher taxes on the U.K. wealthy, according to Knight Frank.

Although ultra-luxury buyers usually pay cash for their properties, falling interest rates throughout the world are expected to help support sales in the second half, according to the report.

Last week, 29 contracts were signed in Manhattan for properties priced over $4 million, according to the Olshan Luxury Market report — the strongest post-Labor Day week since at least 2006.

“With rates moving lower, total transaction volumes are likely to tick higher into 2025,” Bailey said.

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