Sydney’s super-prime residential market outperforms expectations despite COVID-19 lockdowns

Sydney’s super-prime residential market outperforms expectations despite COVID-19 lockdowns
Sydney’s super-prime residential market outperforms expectations despite COVID-19 lockdowns

Research released by Knight Frank confirms that despite lockdowns in response to COVID-19 around the world, 153 residential real estate transactions above US$10m (AU$14.3m) have taken place globally between March and June 2020, with a total value of US$3.2bn (AU$4.6bn). 

However, despite positivity that the global super-prime market didn’t buckle during lockdown, transaction levels to the end of H1 2020 are below the levels seen in H1 2019, with 281 super-prime (US$10m+ / AU$14.3m+) transactions taking place January to June 2020 compared to 594 over the same period 2019. 

The research looks at how 12 key super-prime markets around the world performed in H1 2020 compared to H1 2019 and delves into the number of transactions completed since March 2020 when COVID-19 was officially labelled a pandemic, lockdowns were enforced around the world and international travel ceased.  

Total Transaction Volumes 

Market

H1 2019

H1 2020

March – June 2019

March – June 2020

Hong Kong

155

60

111

41

Los Angeles

77

52

58

35

New York

137

41

100

19

London

75

24

56

16

Palm Beach and Broward

29

24

24

10

Singapore

29

27

24

8

Sydney

13

15

12

6

Dubai

17

8

13

6

Miami

25

12

16

4

Orange County

24

9

21

4

Geneva

10

8

9

3

Melbourne

3

1

2

1

Knight Frank’s Erin van Tuil, Partner, Crown Residences at One Barangaroo, said: “In half one of 2020 transactions were down in 11 of the 12 markets analysed. Sydney was the stand out market and the only one to record an increase in sales compared to half one 2019, from 13 to 15 transactions respectively.

“Looking at the period between March and June 2020, there were six sales in Sydney compared to 12 in the same period last year. However, Sydney’s super-prime market is set for a successful year thanks to its fundamentals as a city, poising it for resilience, strength and stability.”

Leading on the sales of Crown Residences at One Barangaroo, a development which will consist of 82 super-prime and ultra-prime homes, van Tuil experiences first-hand the positive performance of Sydney’s prime market, despite the effects of the pandemic. From her commentary on viewer testimonials, it is clear to see why appetite for high end homes remains.

van Tuil said: “We are receiving a record number of enquiries for Crown Residences at One Barangaroo, Australia’s first fully-integrated hotel branded residences. While we had a quieter April, we received the highest number of enquiries to date in February and June 2020, and sales are performing phenomenally well.  

“After a period of dislocation, the flight to quality property from active participants in the market has increased dramatically. Buyers are looking for a more intimate connection to their homes with space, ceiling height, privacy, services, and the beauty of a building being front of mind. These feelings are evident in viewers of Crown Residences at One Barangaroo, who are attracted by the private sanctuary of the Residences amidst the proximity to public space, with the services and amenities from the hotel below having become more appealing than ever.”

Overall, four markets were within seven of their March to June 2019 levels of transactions, Melbourne only one below, Geneva six below and Dubai seven below, with a total of six sales. 

Total Sales Volume 

Despite the falling number of transactions, deal values were generally higher. Overall, the global average transaction value increased by 15 percent for the March to June period, at US$20.7m (AU$29.6m) compared to US$18m (AU$25.8m) for the same period in 2019.

Sydney recorded a significant rise in average transaction value to US$16.8m (AU$24m), up from US$12.6m (AU$18m) in 2019, an increase of 33 percent. London saw the largest increase and takes the top spot with an average transaction value of US$38m (AU$54.5m), compared to US$16.9m (AU$24.2m) over the same period as last year.  

Market

Total Sales Volume March - June 2019 (US$ million)

Total Sales Volume March - June 2020 (US$ million)

Hong Kong

2,351 

812 

Los Angeles

1,098 

693 

New York

1,793 

363 

London

944 

608 

Palm Beach and Broward

333 

170 

Singapore

454 

130 

Sydney

152 

101 

Dubai

173 

80 

Miami

255 

52 

Orange County

309 

59 

However, Hong Kong ranks highest for the number of transactions and total sales volume with 60 having taken place in 2020 so far worth a combined US$1.2bn (AU$1.7bn). There have been 41 since March and, whilst this is less than half of the 155 in the first half of 2019, it is only marginally down from the 74 in the second half of 2019 when the city grappled with social unrest. 

New York has the third highest number of super-prime sales this year with 41, behind 52 in Los Angeles, and almost half of these (19) have taken place since March. With the city being particularly hard hit by COVID-19, accounting for approximately one in six of all US cases in April, this demonstrates resilience and that the fundamentals remain.

Ultra-Prime Market (US$25m / AU$35.8m)

The research also takes a look at the ultra-prime market (above US$25m / AU$35.8m) in these 12 areas. It highlights that eight of these markets saw one or more transactions in the ultra-prime market over the March to June 2020 period. Two saw more sales than the same period last year and two held steady, with a total of US$1.3bn (AU$1.8m) transacted.  

Market

Total Transactions March - June 2019

Total Transactions March - June 2020

Hong Kong

20

8

London

6

6

Los Angeles

12

5

New York

16

3

Palm Beach and Broward

1

2

Geneva

2

2

Sydney

0

1

Singapore

3

1

Sydney went from zero sales above US$25m (AU$35.8m) in March to June 2019 to one over the same period in 2020. Hong Kong has once again seen the highest number of ultra-prime sales in this time period with eight and a total of 10 so far in 2020, down from 30 in the first half of 2019. However, in terms of total volume of sales, London leads the way with US$434m (AU$621.2m) in sales followed by Hong Kong’s US$372m (AU$532.4m).

van Tuil said: “We expect momentum in the ultra-prime segment will continue as ultra-high-net-worth individuals look for more spacious options post-lockdown. The 82 Residences at Crown Residences at One Barangaroo offer a mix of homes within the super-prime and ultra-prime segments. Viewers are looking across these segments at the two, three and four bedroom Residences that we have remaining on the market, as well as the breath-taking Duplex Penthouse.”

Mark Manners, Head of Prestige Residential, Knight Frank Australia, concludes: “Global events like the COVID-19 pandemic can disrupt sales processes. However, you tend to find sales are postponed, rather than cancelled. Super – prime and ultra-prime property is viewed as a safe investment for the long-term, so buyer interest has not dampened and is expected to increase as markets continue to exit lockdown.”

 

Tags: 
Sydney Knight Frank

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