Irrepressible Cities Poised For Growth

While urban areas have rebounded more quickly than anticipated from the global disruption created by the Covid-19 pandemic, some cities managed to thrive throughout the ordeal. Some metropolitan areas with a severe shortage of luxury homes prior to the pandemic experienced a high volume of sales and rising prices, in part because of the new desire for larger homes and private outdoor space.

In addition, cities with a deep bench of wealthy domestic buyers, continued interest from international buyers, or both, continued to experience a robust luxury real estate market.

“I think people in general have been given a new appreciation for just how important ‘home’ is, as we were all forced to stay quarantined at home for several months,” says Jeff Curtis, agent, Barcelona & Costa Brava Sotheby’s International Realty. “Spacious apartments which have nice outdoor spaces and great distribution have become very valuable, even more so than normal.”

Several cities in Spain were particularly resilient.

In the luxury residential-property sector in Seville, average sales prices rose by 6% from the beginning of the pandemic, and sales increased by 30%, according to Sergio André, managing owner, Seville Sotheby’s International Realty.

“Our market, in comparison with other offices in Spain, is typically about 80% national, mostly Sevillians, and 20% international, mostly from France, Belgium, Switzerland, and the U.S.,” André says.

Continued International Interest in the Strongest Cities

Demand from domestic luxury buyers, especially for homes with patios, terraces, and swimming pools, kept cities like Seville strong. Some cities also continued to see demand from international buyers.

“We received phone calls from all over the world, wondering and perhaps hoping for great discounts or distress-type prices due to the pandemic, but it just never happened,” Curtis says. “A large percentage of our buyers are international, but it’s worth noting that our national luxury market seems healthy as well.”

In Madrid, most luxury buyers come from Latin American and European countries, escaping sociopolitical and economic issues in their own countries and attracted by Madrid’s reputation for welcoming people from abroad, says Javier Guimón Ybarra, office director, Madrid Sotheby’s International Realty.

“There’s a clear decrease of luxury properties on offer in the most sought-after areas of the city, mainly in the areas that are popular among foreign investors,” Ybarra says.

“The market is surprisingly showing extraordinary strength in certain luxury neighborhoods, such as the Salamanca District, Chamberi, and the Retiro District.”

While foreign buyers ready to establish residency in another country were less common in most places during the height of the pandemic, some investors continued to buy properties sight unseen.

Asian Cities Retain Appeal for Wealthy Residents

Some overseas investors purchased in Japan, for example, due to the stability of the Japanese economy, says Mugi Fukushima, branch manager, List Sotheby’s International Realty, Japan in Ginza, Tokyo.

While wealthy New Yorkers fled to the Hamptons or to Palm Beach when the pandemic struck, and San Franciscans headed to the beach, the desert, or the mountains, agents say there was no similar dramatic withdrawal from cities such as Hong Kong, Singapore, and Tokyo. Urban high-rise living is the norm in many Asian countries, and there are fewer alternative domestic locations where wealthy residents retreat.

Singapore thrived during the pandemic and is anticipated to continue to see an influx of wealth because of its reputation for stability, international finance, and as a safe haven for investors. Hong Kong is expected to remain able to rely on consistent demand from Chinese high-net-worth individuals, agents say.

“Prices in the Hong Kong luxury market were steady throughout the pandemic, and the number of transactions has been consistently increasing,” says Franky Cho, chief operating officer, List Sotheby’s International Realty, Hong Kong.

Sales have been especially strong for newer luxury developments in Hong Kong, including a record-high price of HK$89,000 per square foot for a unit at 8 Deep Water Bay Drive in Repulse Bay.

Cho believes better containment of Covid-19 and the weakened impact of social movements in Hong Kong have helped the market there.

“The quantitative-easing policies launched by other countries and the consistently low supply of domestic properties in Hong Kong also have had an impact on the soaring number of transactions and prices,” he says.