The global wealthy are showing confidence in the ultra-luxury residential real estate market despite economic and geopolitical uncertainties, according to a recent study by Luxury Portfolio International (LPI). The State of Luxury Real Estate 2023 report, which surveyed an aggregate 90% of the world's affluent class, found that the outlook for worldwide wealth is positive for the next five years.
The study revealed that the global wealthy, also known as ultra-high net worth individuals (UHNWI), are living in a state of adaptation to changing and unpredictable circumstances, yet remain confident. Despite potential headwinds from economic and geopolitical uncertainties, as well as concerns about climate change and the ongoing threat of COVID, they are resilient and expect 2023 to be an even stronger year for their fortunes.
The luxury residential real estate market is also expected to remain strong, with both owners and buyers anticipating values to rise in 2023 and investment-property purchase expectations remaining at 2022 levels. The report also highlighted a continuing trend of affluent housing shortages, with the number of buyers exceeding the number of sellers for the third consecutive year. This shortage in available housing units has impacted choice and sales, but inventory is expected to improve slightly in 2023.
The luxury homebuyer's market behavior has also shifted in response to the buying frenzy of the past few years, with U.S. buyers now looking in secondary markets and the creation of new luxury locales. The U.S. has minted 199 new luxury places since the pandemic began, with Idaho having the fastest growing luxury destinations between 2019 and 2022. Despite the ongoing global issues, luxury homebuyers remain optimistic in their purchasing plans, recognizing that a recession may be on the horizon but building resilience against the turbulence of the global landscape.