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2020 Is Shaping Up To Be A ‘Good Year’ For The Luxury Real Estate Market

The real estate market has experienced a turbulent year due to the ongoing effects of the coronavirus pandemic, but it appears that the luxury real estate market may be weathering the storm, with experts noting that ‘ultra-expensive’ house sales appear to be on the rise in 2020.

In the summer of this year, it was reported that a Vancouver mansion in Shaughnessy sold for an incredible $23 million, placing it as the most expensive property to sell in the city during 2020. Furthermore, one property expert has indicated that it was the first home to reach an asking price in excess of $20 million for over two years.

It appears that this Vancouver mansion wasn’t an isolated incident either. In an interview with the Straight, Adam Major, managing broker of Hollywell Properties revealed that in the past five months there had been 16 property sales which reached over $10 million, with a further 19 homes in the same price region changing ownership. Having analyzed the figures for the past few years, Mr. Major believes that the luxury property ‘peak’ took place in 2016, when he revealed that 57 homes over the $10 million mark were sold. Since then, the numbers have declined steadily, with the lowest figure occurring in 2019, when just eight properties in the price region were sold.

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Mr. Major highlights that at ‘uptick’ this year is primarily because the market is coming out of a dip, which makes the growth look slightly more optimistic than perhaps it really is. Nevertheless, there have been a number of challenges this year which have stalled property sales, although it is thought that this has mainly affected homeowners in the lower price categories.

Indeed, it would seem that luxury property is not the only area which seems to be unaffected by the pandemic. In fact, it’s highly likely that any sector which relies on custom from the super-rich will be doing very well at present. Reports suggest that the ‘super-rich’ appear to have been riding the coronavirus storm well, with U.K. newspaper The Guardian revealing that over 75% of the world’s richest people had seen an increase in their family fortunes this year. Research into the family offices of these individuals found that most were likely to have benefited from the financial markets, while less wealthy people are likely to have seen their savings and pension pots crumble. In a further story by The Guardian, it was revealed that Billionaires’ wealth had risen to $10.2 trillion amid Covid crisis, that’s over a quarter growth at a time when many are struggling to make ends meet due to the loss of jobs, reduced hours or sickness.

One of the reasons for the ‘luxury property boom’ is that people are starting to realize that they can work from anywhere, so why not make it somewhere enjoyable? This has led to many luxury purchases taking place in holiday destinations and hotspots such as Palm Beach. In this particular destination, it has been reported that the average Palm Beach home price in Q3 was $7 million, with contracts up by 62%.

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In another cooler part of the country, Compass real estate agent Steven Shane, who is based in Aspen, revealed that buyers were coming from all over to lay their roots down. In an article featured on Housing Wire, He was quoted as saying: ‘schools in Aspen have increased their enrollment, as families are putting their roots down where they can have more space. I think that there’s a lot of people who rented, put their kids into school, and now, interest rates are so low, if you think about it, it makes a heck of a lot more sense to buy something than to pay rent. People learned that they can work from anywhere. For the most part, people can work remotely, and their children might be attending school remotely. So why not be in Aspen, Greenwich, Connecticut, or the Hamptons?”

Over the pond in the U.K., it was also revealed that luxury property was thriving, particularly in London, where wealthy buyers were seeking out bigger houses for working from home. As reported by the Evening Standard, figures by Knight Frank revealed that the number of new buyers looking for £3 million-plus homes was up 53% since lockdown ended on 23 May when compared with the five year average.

Extending further afield, a report by Dispatches Europe revealed that Europe has the fastest-growing population of rich and super-rich and this is driving growth in purchases of luxury real estate as an investment. It also revealed that the top 3 most popular European countries for luxury real estate investment are Spain (27 percent of survey respondents), the UK (23 percent), and Italy (19 percent).

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