Sydney ranks #9 among global ‘super prime’ real estate cities

Sydney ranked 9th in the top 12 of the key markets analysed globally, after clocking in a total of 67 “super prime” property deals or high-end residential sales of more than US$10 million in the 12 months to March, according to Frank Knight’s Global Super-Prime Intelligence report.

Overall, the value of super-prime sales in the NSW capital over the period stood at US$1.233 billion, with an average sale price of US$16.2 million.

The strong sales figures put the harbour city ahead of other posh postcodes including Geneva (63 super prime sales), Orange County (54 super prime sales), and Paris (26 super prime sales).

Knight Frank noted that since 2020, Sydney has overtaken Orange County on the US west coast in the number of super-prime properties sold annually.

Moreover, the proportion of super-prime sales being recorded in the harbour city has been rising faster than when compared to Los Angeles, according to the report.

Dubai emerged as the leading market for sales in the prestigious residential sector this year, recording a remarkable 88 transactions.

Following closely behind were Hong Kong (67 super prime sales), New York with (58 super prime sales), Los Angeles (46 super prime sales), and Singapore (46 super prime sales). London secured a mid-table position with 36 transactions exceeding the US$10 million mark during the same period.

Over the first quarter of 2023, Sydney recorded 10 super-prime settled sales, ahead of Paris and Orange Country, both of which recorded three sales.

Overall, super-prime sales rose 11 per cent globally compared to the previous quarter, with 417 high-end residential property transactions taking place across the world valued at US$7.2 billion.

Notably, the most expensive average super-prime sales took place in Geneva at US$23.8 million and London at US$20.4 million.

Michelle Ciesielski, Knight Frank head of residential research in Australia, said super-prime residential property has retained its attraction for high-net-worth buyers despite global economic headwinds, evidenced by the increase in quarterly sales despite annual sales volumes falling from a peak of 2,298 over 2021.

“The data for the first quarter of this year confirms an ongoing desire for new US$10 million-plus purchases at a time when markets were clouded by peak uncertainty around global inflation and interest rates,” she said.

While headwinds are less likely to impact buyers of super-prime property as they typically transact through cash payments, she acknowledged these factors have an impact on sentiment.

“The peak in 2021 occurred during COVID lockdowns when the super wealthy were looking to buy holiday homes in lieu of being able to travel.

“Another issue holding back transactions in recent months has been limited stock availability in most markets around the globe, so this limited supply issue isn’t just happening here in Sydney,” she explained.

Going forward, Ms Ciesielski forecasts “more subdued conditions” in 2023 compared to the recent 2021 peak, with global transactions likely to total US$25 to 27 billion for the full year.

“However, the recovery in growth in the global economy later this year will aid transactions in 2024, with a return to US$30 billion-plus sales,” she stated.

Sydney’s super-prime market set to attract international buyers

Knight Frank’s head of residential in Australia, Erin van Tuil, noted that over the past five years, Sydney’s super-prime market had “matured”, and as a result, will increasingly attract more international buyers, which was one of the key global drivers for super-prime sales.

“In more affordable markets, domestic buyers tend to dominate, while in more expensive markets, the importance of international investment rises,” she said.

The expert further explained that unlike in the US, Singapore, and the UK, international buyers have been slower to return to Australia’s prestige residential market since borders reopened.

However, Ms van Tuil revealed enquiry from international buyers have intensified over the past few months and she predicts the demand will ramp up further in the lead up to the spring and summer season.

“We know that the number one market for Australian ultra-high-net-worth individuals (UHNWIs) to buy in is the United States, with 59 per cent saying if they were to buy a new home outside Australia, it would most likely be in the US, according to our latest Attitudes Survey,” she stated.

While only 7 per cent of UHNWIs from the US expressed interest in buying properties in Australia during the survey, Ms van Tuil forecasts a potential increase in such interest going forward, driven by the improving currency exchange rates and the appealing value proposition that Australia presents to international buyers, including those from the US.

“US buyers often fly under the radar in Australia, but there is a real synergy between the west coast of the US and the east coast of Australia, and we’re starting to experience this again,” she stated.

When analysing international ownership of prime luxury homes in Australia, she highlighted US ownership comes in behind the UK and is then followed by Singapore and China.