Tarpon Island, a private island in Palm Beach, Florida, sold for $150 million in May 2024.
CNBC
A version of this article first appeared on CNBC's Inside Wealth with Robert Frank, a weekly guide for high-net-worth investors and consumers. Register to receive future issues directly to your inbox.
Sales of ultra-luxury homes rose in New York, Miami and Palm Beach, Florida, in the second quarter, although they fell in much of the rest of the world, according to a new report.
The number of homes selling for $10 million or more in the second quarter rose 44 percent in Palm Beach, 27 percent in Miami and 16 percent in New York, according to a report by real estate firm Knight Frank.
According to the report, New York led the U.S. in sales of homes worth more than $10 million, with 72, its highest number in two years. Miami came in second with 55, followed by Los Angeles with 42 and Palm Beach with 36. Los Angeles saw a 29 percent decline in sales of more than $10 million, largely due to the new “mansion tax,” which adds a 5.5 percent charge to homes sold for more than $10 million, the report said.
The biggest sale of the quarter was the $150 million purchase of Palm Beach's only private island, which was reportedly acquired by Australian infrastructure investor Michael Dorrell, according to The Wall Street Journal. In June, a historic 3.5-acre estate in Palm Beach sold for $148 million, while in Manhattan, the penthouse at the Aman New York sold for $135 million in July.
While demand in many major luxury markets is slowing from the 2021 peak, ultra-wealthy buyers continue to pay record prices for rare trophy properties, driven in large part by surging financial markets, Knight Frank said.
“Substantial wealth creation has underpinned growth in the global luxury retail market,” said Liam Bailey, global head of research at Knight Frank. “The transformation of markets such as Dubai, Palm Beach and Miami has more than offset the slowdown experienced by some more mature markets.”
Globally, in the 11 major luxury markets tracked by Knight Frank, sales of homes worth more than $10 million fell 4% from last year to $8.5 billion.
Dubai is a global leader in ultra-luxury real estate, with 85 sales in the second quarter, according to the report. The city has seen a stratospheric rise, as the ultra-rich from Russia, China, Europe and other areas have moved to Dubai for its favorable tax and regulatory regimes. In 2019, Dubai had just 23 sales of more than $10 million. In the past 12 months, it has had 436 sales, though sales in the most recent quarter were down slightly from last year and the first quarter, Knight Frank said.
London has seen one of the world's biggest declines, with sales of homes worth more than $10 million down 47% from a year ago amid fears of higher taxes for the UK's wealthy, according to Knight Frank.
Although ultra-luxury buyers typically pay cash for their properties, falling interest rates around the world are expected to help support sales in the second half, the report said.
Last week, 29 contracts were signed in Manhattan for properties priced above $4 million, according to the Olshan Luxury Market report, the strongest post-Labor Day week since at least 2006.
“With rates falling, total transaction volumes are likely to increase through 2025,” Bailey said.
