Miami is still a top international luxury market, but its standing as such has diminished in recent years, according to Christie’s 2017 global luxury real estate market report.
The Magic City ranks tenth on Christie’s “luxury index” list, which measures the sales activity of homes over $1 million in various markets as well as international interest, among other indicators. Miami fell three spots from its 2015 position, representing the biggest drop-off of any city.
The reasons for Miami’s dip in its stature as a top international luxury market is well known: an overbuilding of luxury units and a slowdown in interest, among other reasons.
“A decline in luxury sales activity, an influx of new development condos, and a steep increase in inventory supply has impacted the market,” the white paper reads. “Well-priced Miami properties are still selling based on existing demand, which remains significant though diminished, but price reductions are becoming more commonplace in the coastal city.”
What’s changed
While luxury home prices worldwide are going up, Miami is actually one of the more affordable of the top international markets. Among luxury markets, Miami had the cheapest per-square-foot price of $685 in 2016. The highest was $4,985 in Hong Kong, the No.1 international luxury market, according to Christie’s. The city also had the lowest entry point of any city labeled a “global economic hub” at $2 million.
In Miami, almost 40 percent of all million-dollar-plus sales during 2016 realized a reduction of almost 14 percent from original asking prices. But those market corrections may be a good thing for Miami and the future health of its luxury market, according to a local agent quoted in the white paper.
“To that end, we have no doubt that a great driver of residential real estate sales in 2017 will be appropriate pricing,” says Ron Shuffield of EWM Realty International. “New construction of luxury condos, coupled with a growing resale inventory, has added a large number of units to the market,” he adds, noting that a four percent drop in international buyers exacerbated issues caused by seller overpricing in the luxury property market.
Expensive homes
Despite being one of the more affordable luxury markets, the Miami area did record the fourth most expensive sale in 2017. Chicago billionaire Ken Griffin paid $85 million for a Palm Beach oceanfront estate in early January. The most expensive sale so far this year was the $360 million spent on a Hong Kong estate. Hong Kong recorded the three most expensive home sales this year as well as the most expensive listed home sale in 2016.
Miami’s ranking in the study is based on 2016 figures, however, and it did not place among the most expensive home sales in the year. But with that massive sale on the books, and with local predictions that price corrections will bring in new buyers, Miami could move up when the time comes for the 2017 rankings, according to Christie’s.