Aussie luxury homes a fresh target for global ultra-wealthy: Report

Ganeden at Wentworth Rd, Vaucluse – formerly owned by corporate lawyer John Landerer and wife Michelle – has reportedly just sold for over $62m to a Chinese richlister.

A global report has named Australia among the top three destinations in the world where the global ultra-wealthy plan to buy homes this year – with two regions already standing out.

The world’s ultra-wealthy have shifted their riches back to real estate, Knight Frank’s The Wealth Report 2022 found, with Australia named among the top three places in the world where they plan to buy a home in 2022 – behind the United States and the United Kingdom.

This as luxury homes in the country were “the ultra-wealthy’s asset class of choice” for local richlisters through the pandemic, with 31 per cent buying residential property in 2021 and 28 per cent expecting to make purchases this year.

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Gina Rinehart, Annastacia Palaszczuk and Cate Campbell at The Courier-Mail Future Brisbane lunch at Royal International Convention Centre in Brisbane in December. Picture: Richard Walker

Australia’s ultra wealthy bought homes at the second highest level in the world last year (31 per cent) beaten only by their peers in Hong Kong (37 per cent).

The country has also been thrust firmly into the spotlight globally, with Byron Bay in northern New South Wales topping the list of international hot spots for the ultra-wealthy. Knight Frank predicts it will see price growth of 30-35 per cent over the next five years as the mega rich look to lock in limited supply of luxury homes there.

The view of Sydney’s skyline from the $62m-plus home at Wentworth Rd, Vaucluse, that has recently sold. Sydney is expected to deliver the top growth of all Australian cities in the high end market this year.

All Australian cities in The Knight Frank Prime International Residential Index 1001 beat the prime global price growth last year, the report said, delivering an annual average of 12.3 per cent, with the Gold Coast named the best performing Australian city, ranking number 12 globally off its 17.1 per cent growth. The Gold Coast beat Sydney (16.2 per cent) which was number 17 globally, Brisbane was at number 29 (11.2 per cent), Perth was 31st (10.5 per cent) and Melbourne came in 39th (9.4 per cent).

Michelle Ciesielski of Knight Frank Australia said a massive 32 per cent of the wealth of Australia’s richest people was now in their first and second private homes.

She said the desire to lock in luxury homes came as “there is widespread concern as new homes have generally been shrinking in size over recent years and with significant lags in construction coupled with supply chain issues it’s going to take some time to deliver”.

“This will only generate a premium on large luxury homes for some time to come.”

Ms Ciesielski said the trend of fleeing cities for the regions was now also shifting.

“What we are now seeing is that ultra-wealthy Australians are transferring their wealth back to the cities while also investing in second homes. The use of second homes for longer periods was supercharged in 2021 as flexible working grew and homeowners looked to decamp for periods of time.”

Sails at 2585 Gracemere Circuit, Hope Island is for sale. The Gold Coast has the top growth of all Australian cities last year, according to Knight Frank’s The Wealth Report 2022.

The Hope Island Versace-inspired mega-mansion with a rooftop helicopter landing pad is listed at $16.8m.

In line with the expected shift by richlisters back to cities, Sydney was expected to deliver Australia’s strongest growth this year (9 per cent). The entry point for the top 1 per cent of homes in Sydney was on par with Los Angeles now, the report found at US$6.3m.

Knight Frank Australia’s Shayne Harris said space, security and emotion drove the flight to real estate at the top end.

“The focus on space and security has intensified during the course of the pandemic, with wealthy Australians focused on investing more of their income into their homes and home spaces, with a view to spending more time there.”

“Interestingly, this is reflected across similar asset classes such as superyachts, with suppliers seeing order numbers increase 6 per cent year-on-year in 2021 – so whether people are in their luxury mansion or on their superyacht, they want the ability to exist in a bigger, safer space that they enjoy spending long periods of time in.”

Major things richlisters consider in properties they buy were broadband speed (56 per cent), wildfire risk (38 per cent), flood risk and the energy source (31 per cent), the report said.

Knight Frank expects the top luxury market trends this year to be “persistent stock shortages in prime markets; ramped up taxes and cooling measures, and the further detachment of the super prime market of properties US$10m-plus ($13.7m-plus).”

“In 2022, we will see the luxury housing boom endure, with more crossborder transactions as conditions return closer to pre-pandemic levels, and we are likely to continue to see demand for our cities grow,” Ms Ciesielski said. “In Australia, 28 per cent of Australian UHNWI’s plan to buy a home in 2022 and we know 36 per cent of Australian UHNWIs are considering refinancing options in the next 12 months to capitalise on the current low interest rate environment.”

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