High interest rates hit luxury real estate sales

According to the report published by the international real estate consultancy Knight Frank, high interest rates caused a recession in the luxury real estate market.

According to the report, sales of homes over $10 million fell 13 percent in the second quarter compared to a year earlier.

Compared with total sales of $40.7 billion in 2021, total sales in the 12 months through June fell to just under $30 billion. However, this figure is still well above the $18.6 billion in sales in the pre-pandemic period.

Real estate sales, which surged during the Covid-19 period as the ultra-wealthy sought larger properties and second homes with resort-like amenities, have declined along with high interest rates, affecting even the top end. of the real estate market.

DUABI IS AT THE SUMMIT OF THE LUXURY HOUSING MARKET

As foreign wealth continues to flow into the United Arab Emirates, Dubai ranked first by luxury home sales volume in the second quarter.

While the total value of home sales over $10 million in Dubai was $779 million in the second quarter of 2022, this figure increased to $1.6 billion in the second quarter of 2023.

New York ranked second in second-quarter sales with $1.1 billion, followed by London with total sales of $1 billion.

‘LACK OF SUPPLY CAN CREATE PRESSURE ON SALES’

Knight Frank global research manager Liam Bailey said a lack of supply in most markets next year could put pressure on sales.

Bailey said in his statement on the topic: “The biggest constraint in most markets in the short term is supply,” adding:

“The lack of new construction starts between 2020 and 2022 means a weak 2024 for new deliveries. This indicates increased competition for existing shares. This will put a minimum limit on prices.”