The high-end real estate market is expected to remain stable with a slower rate of appreciation in 2025, according to Sotheby’s International Realty’s (SIR) 2025 Luxury Outlook report. Bradley Nelson, SIR’s Chief Marketing Officer, noted that while the global luxury real estate market isn't predicted to see a significant decrease in value, it is entering a more balanced phase, with strong demand still underlying the surface.
Growing Migration of High-Net-Worth Individuals
A significant trend in luxury real estate for 2025 is the increasing movement of high-net-worth individuals (HNWIs) across borders. A report by Henley & Partners indicates that 135,000 wealthy individuals are expected to migrate to new countries in 2025, marking a rise from 128,000 in 2024. The United Arab Emirates (UAE) is set to be the top beneficiary, attracting a record-breaking 6,700 new wealthy residents in 2024, with more expected in 2025.
Dubai, in particular, continues to draw global wealth due to its tax incentives, golden visa programs, and lifestyle offerings. Branded residences in Dubai have seen an increase in demand, with properties commanding premiums of over 25% compared to their unbranded counterparts.
Shifting Foreign Buyer Activity
While the United States continues to attract significant foreign investment, it has experienced a decrease in international purchases of luxury real estate. According to SIR, between April 2023 and March 2024, foreign buyers purchased 54,300 homes worth $42 billion in the US, a significant drop from 2017’s $153 billion for 284,500 homes. However, high-value properties still see strong demand from foreign buyers, particularly in the super-prime market.
In the aftermath of the devastating Los Angeles wildfires that destroyed thousands of luxury homes, it remains too soon to predict the long-term impact on the market. However, Nelson emphasized that displaced families are focused on short-term solutions for the moment.
Millennial and Gen Z Buyers: A New Era for Luxury Real Estate
Younger buyers, especially millennials and single women, are poised to drive the luxury real estate market in 2025. These buyers are showing interest in aesthetically pleasing, historic properties, often influenced by pop-culture trends. One example is the impact of the hit HBO series The White Lotus, which sparked an influx of American and British buyers seeking historic Italian villas featured in the show.
These younger buyers are also changing the way luxury real estate is marketed. Social media platforms, particularly Instagram, have become crucial tools for real estate agents, with some brokers generating up to 90% of their sales through social media channels. The shift in how real estate is marketed to a younger generation underscores the growing importance of digital presence and cultural relevance in luxury real estate.
Conclusion
As 2025 unfolds, luxury real estate is set to experience steady growth, driven by the influx of wealthy individuals relocating to new countries and a younger generation’s evolving preferences for unique, historic properties. With the role of social media becoming increasingly pivotal in the sales process, the luxury real estate sector is adapting to meet the demands of a changing market.
Comments