"Our goal for the fourth edition of the Luxury Outlook report was to couple the expert insight of our agents with the perspectives of leading global institutions on the trends affluent buyers can expect in the months ahead to help them make opportunistic transactions in 2024"

Bradley Nelson, chief marketing officer, Sotheby's International Realty

2023 unfolded as a pivotal chapter in the post-pandemic real estate narrative, marked by a market recalibration in response to marginally elevated inventory and a relentless surge in interest rates. This period represented a subtle yet noteworthy reset, where demand remained robust despite the moderation of frenzied activity.

The Sotheby's International Realty 2024 Luxury Outlook was crafted by surveying real estate agents worldwide specializing in transactions within the (US)$10M+ price category. This information was supplemented by data from industry experts, including UBS, The Brookings Institution, McKinsey & Company, Kastle Systems, and luxury experts at Sotheby's Auction House. According to the report, in 2023, Sotheby’s International Realty achieved some notable high-value sales. For instance, looking at the National level, a waterfront estate in Greenwich, Connecticut was sold for (US)$138.83 million, marking the most expensive residential property ever sold in the state. Additionally, the Bouvier compound in Washington, D.C. set a record at US)$52 million. Notably, several sales were also made in the US$30 million range in Seattle, San Francisco, California, and Manhattan. While bidding wars may not be as prevalent, exceptional properties in sought-after locations, including Bainbridge Island and Seattle continue to sell at a premium. The high-end market leads the way out of an economic downturn, and this sentiment appears to be reflected in the current landscape. The leaders at SIR anticipate this trend will persist into the new year.

Sotheby’s International Realty operates in 83 countries and territories, boasting over 1,100 offices and a team of over 26,500 sales associates. Philip White, President and CEO of Sotheby's International Realty, in a recent conversation to launch the 2024 Luxury Outlook, shared his insights on the upcoming opportunities and obstacles in the near future. "As we navigate shifts in the real estate market, our agents from 83 countries and territories worldwide continue to lead the way. Luxury Outlook provides clients with unparalleled and trusted expertise as they make informed real estate decisions in the coming year, whether buying, selling, or investing, regardless of their location." Read the interview here, 2024 Luxury Outlook

Key findings:

1. The international market continues to exhibit strength, bolstered by a myriad of policy and regulatory adjustments that are intricately intertwined with real estate markets, exerting a significant impact on the discernment of investment initiatives.

2. Luxury home investors are increasingly mobile, choosing to diversify their residential portfolio and adopt alternative transaction strategies in response to a variety of factors such as escalating tax burdens, evolving government inducements, and shifting climate dynamics. This shift reflects a growing awareness of the need for flexibility and adaptability in the face of changing economic and environmental landscapes.

3. Telecommuting and hybrid work are reshaping the demands of affluent homebuyers in significant ways. As more professionals embrace remote work and flexible schedules, the need for comfortable and functional home offices has become a top priority. Additionally, access to high-speed internet and nearby co-working spaces has also gained prominence as influential factors in the decision-making process for those seeking a new home. These shifts in priorities reflect the evolving lifestyle choices of affluent individuals, driving changes in the real estate market and influencing property designs and amenities.

4. Sustainability has shifted from a niche interest to a top consideration for many buyers. emerging as a paramount consideration for discerning luxury homebuyers. In an era where environmental consciousness intertwines with opulent living, understanding the dynamics of this evolving preference becomes instrumental in navigating the nuances of the luxury real estate landscape.

5. A historic rise in mortgage interest rates has resulted in a higher percentage of all-cash deals globally. Despite the impact of higher interest rates, demand remains robust in various market segments.

6. Owners need to be strategic to minimize the tax impact of wealth transfer, given the strong appreciation of real estate values and the impending drop in the estate tax exemption.

7. More than 80% of top Sotheby's International Realty agents think that AI will have the biggest effect on the real estate industry in the next five years. The real estate industry is using both the physical and digital worlds to market and sell homes.

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