The world's wealthiest individuals are still drawn to London and New York for ultra-prime property purchases, with both cities topping the global market in 2022, according to The Wealth Report

compiled by Knight Frank. London recorded a 26% increase in sales of properties worth $25m or more compared to 2021, hitting its highest level since 2014, while New York saw a 35% decline. Los Angeles was in third place with 39 sales, followed by Hong Kong with 28 and Miami with 23.

Liam Bailey, global head of research at Knight Frank, noted that despite rising economic headwinds and growing uncertainty, the wealthy continue to invest in luxury residential property, with London and New York being the most sought-after cities. He added that while a slowdown in high-end sales is likely this year, the reopening of China and ongoing appetite for lifestyle-led purchases will continue to support activity.

The report also found that pent-up demand following Covid-19 was a significant factor in driving sales, as many buyers were unable to travel to view properties in 2020 and 2021. Furthermore, a flurry of new-build completions worth $25m or more contributed to the strength of the ultra-prime market in 2022.

While the pandemic had previously led to a shift in demand towards non-urban markets, such as country, coastal, and mountain markets, the revival of city markets in late 2021 coincided with the lifting of Covid restrictions in Europe, the UK, and the US, a trend that continued through 2022.

Despite the introduction of the Register of Overseas Entities in the UK, which mandates all overseas entities that own property in the UK to register their beneficial owners, the report found that this did not adversely impact demand for high-value properties. Bailey explained that the UK's leading position on beneficial ownership transparency compared to other comparable jurisdictions may not suit all potential investors. However, for the majority, market transparency can be an attraction that bolsters the UK's reputation for strong governance.

The report also revealed that there were 1,392 sales above $10m in the super-prime market across the 10 key global markets analyzed in 2022, a decline from the record-breaking 2,076 transactions recorded in 2021 but still 49% above 2019's total and equating to $26.3bn in sales. New York remained the most active super-prime market with 244 sales of $10m or more, followed by Los Angeles with 225 and London with 223.

In 2022, the second half of the year saw a slowdown in transactions due to rising debt costs and recession fears, but the decline was moderate, with 44% of transactions taking place in the final six months. European cities, such as Geneva and Paris, were the most resilient, with their super-prime sales growing, while London's sales numbers dipped marginally with only two fewer than in 2021.

Overall, Flora Harley, research partner at Knight Frank, predicted that 2023 would be a year of continued normalization, with transaction levels reverting to pre-pandemic levels, down on the past two years but still highly active. Photo by Paul the Archivist, Wikimedia commons.