Luxury real estate is the best bet for affluent investors

Wealthy investors who venture on luxury real estate stand the best chance of success.

In 2023, these luxury real estate markets are likely to do very well or very badly.

A new report says that wealthy people who want to bet on high-end real estate should put their money in Dubai or Miami next year.

Knight Frank, a real estate consultancy, put together a list of the top 25 luxury or "prime" real estate markets in the world. Dubai was at the top of the list, with prices expected to rise by 13.5% in 2023. Miami came in second, and prices there are expected to rise by 5%. After that, 4% increases were expected in Dublin, Lisbon, and Los Angeles.

Seoul and London are expected to do the worst next year, with prices dropping by 3% in both cities. Prices are expected to go up by 2% next year in New York, which came in at number 13.

Still, Knight Frank says that even the best luxury markets will slow down next year as interest rates rise and economies slow down. Knight Frank thinks prices will go up by an average of 2% in each of the 25 cities in 2023. This is less than the 2.7% increase they predicted six months ago.

The change suggests that the wealthy around the world, who don't seem to be affected by inflation or slowing economies, are putting off big real estate purchases or becoming more picky about price as interest rates rise.

The report said, "Prime markets are more protected from the effects of higher mortgage costs, but they are not immune." "In most prime residential markets, the shift from a seller's market to a buyer's market is already under way."

In 2022, prices in Dubai went up by 50%, so the price hikes in 2023 are a big slowdown. Over the past year, there have been a lot more wealthy people moving to Dubai. This is mostly because Russians are looking for a safe place to keep their money, yachts, and real estate because of Western sanctions related to the war in Ukraine.

In October, prices for single-family homes in Dubai went up by 13%, and the number of sales went up by 73% over the same time last year.

Miami is still a popular place for rich people to live because it has low taxes, and more and more financial firms are moving their headquarters or offices to South Florida.

Even though the 2% increase that is expected in New York next year is less than in 2022, many brokers expect prices to go down next year, especially in Manhattan. Knight Frank said that overseas buyers who "want more, not less, exposure to the U.S. dollar as the Federal Reserve ramps up rates" will be good for New York.

The report says that Singapore is the only Asian city in the top 10 and one of only four cities where the forecast has gotten better in the last six months. Rich Chinese people are moving their money and often their families to Singapore to get away from strict COVID lockdowns and a slowing economy. This is good for Singapore.

Cash will be king in all 25 markets because sellers will be more interested in buyers who are willing to pay in cash. This is what Knight Frank said. A flight to safety in real estate will also be caused by political and economic instability in many countries. This will "push buyers to mature and transparent luxury markets."