Sales of luxury apartments worth more than $10 million a piece surged nearly eightfold during the first half of the year compared to the decade average, with the ultra-rich buyers splurging more than $650 million in Sydney alone, Knight Frank research shows.
A total of 67 tightly held super-prime luxury apartments changed hands around the country, a sharp rise from the 8.7 average annual sales in the past 10 years. The majority of those transactions were at Crown Residences at One Barangaroo.
“Rightsizers”, or those downsizing to luxury apartments, targeted mostly newly built or off-the-plan high-rise apartments, except in Sydney, where the lack of new stock forced buyers to look at existing properties, said Michelle Ciesielski, Knight Frank’s head of residential research.
“The surge in demand was driven by ultra-wealthy buyers looking for a low maintenance apartment with house-like proportions for entertaining, as well as those seeking a secured luxury apartment residence that can be easily locked-up when they jet off for long periods of international travel again next year,” she said.
The higher demand has lifted values for new apartments by 36 per cent since June 2015, outperforming the established apartment market, which posted a 31 per cent increase across the major cities.
Sydney was the only city to buck the trend with the older stock soaring by 48 per cent compared to 30 per cent for new apartments.
“Buyers were left with little choice, with limited new luxury products being launched across Sydney prime regions throughout this time,” Ms Ciesielski said.
“This made established apartments significantly more competitive with a highly motivated buyer pool.”
Knight Frank defines super-prime properties as the top 1 per cent of each market by value – generally a threshold of more than $10 million in Sydney and Melbourne and $7 million in Brisbane, Perth and the Gold Coast.
Ms Ciesielski said luxury apartment values will rise further in the years ahead amid falling supply.
“In contrast to increasing demand, the pipeline of new apartments in prime regions around Australia will fall by 39 per cent over the next three years across low-rise, mid-rise and high-rise projects, which will mostly be felt in Brisbane and Sydney,” she said.
“The widening gap between this buyer demand and appropriate property supply remains concerning, and residential construction difficulties continue to delay delivery of new products.
“The shortage of suitable product, particularly at the top end of the market where rightsizers play, has been exacerbated by developers unable to easily secure sites in prime locations adding to the highly pressurised buying environment across Australian cities.”
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/prices-soar-as-ultra-rich-splurge-650m-on-luxury-sydney-apartments-20211013-p58zkx