The world's wealthiest home buyers are pulling back from the traditional magnets of New York, Hong Kong and London, making way for cities such as Auckland, New Zealand and Jackson Hole, Wyo., to rank among the fastest-growing luxury real estate markets.
Sales of luxury houses – those of at least $1-million (U.S.) – rose 8 per cent worldwide last year, slowing after a 16-per-cent jump in 2014, according to a Christie's International Real Estate survey released Thursday. Purchases declined in Manhattan, Hong Kong and central London, while jumping 63 per cent in Auckland, 48 per cent in the Toronto metropolitan area, 21 per cent in Paris and 45 per cent in the resort market of Jackson Hole.
Buyers' appetite for houses in gateway cities globally has been damaged by economic unrest, soaring prices and exchange-rate shifts. But investors are seeing opportunities in cheaper locations where there's more room for growth in property values, said Dan Conn, chief executive officer of Christie's International Real Estate, the auction house's luxury-property brand. Rather than Vancouver, Chinese buyers are considering nearby Victoria, for example, and skiers who like Aspen are choosing Jackson Hole instead, he said.
"The story for 2015 is that it was the year of the underdog," Mr. Conn said. "A lot of the growth story has played out in the primary markets over the past few years, and now many investors are going where there is a more significant return opportunity."
Billionaires lost ground last year. The collective wealth of the 400 richest people in the world dropped by $30.1-billion, to $3.94-trillion, according to the Bloomberg billionaires index. It was the first annual decline since Bloomberg began tracking the world's wealthiest people in 2012.
In central London, sales dropped 4 per cent last year from 2014. They declined 5 per cent in Manhattan and 12 per cent in Hong Kong, and the slump in oil prices helped drive sales down 25 per cent in Dubai, Mr. Conn said. In Miami, where South American buyers are pulling back just as a flood of newly constructed buildings comes to market, sales fell 1 per cent in 2015. Last month, only 152 Miami homes traded hands for $1-million or more, down 23 per cent from a year earlier, according to Christie's.
"It's not that people have shifted out of New York and have gone to Auckland," Conn said. "They will still invest in New York. But when they look at where they go next, the next opportunity is a place that was historically overlooked."
Christie's surveyed its affiliated brokerages to examine 100 luxury markets worldwide. The company also polled more than 250 luxury residential real estate agents across its global affiliate network to prepare the report.