Miami Is Now World's Seventh Largest Luxury Real Estate Market Thanks to One Penthouse Sale
The penthouse at Faena
Courtesy of Faena House
Every year Christie's International Real Estate compiles its list of the world's top luxury real estate markets. Miami has made frequent appearances in the top ten, but its ranking in the newly released 2015 study is the highest it has ever sat. In fact, Miami overtook both Paris and San Francisco to reach seventh place.
Christie's expects that ranking to fall next year, and the surge in the rating may have been due to the sale of one single mega-priced penthouse.
Christie's uses its "Luxury Index" to compile the rankings. Factors taken into account include the average luxury price per square foot, the number of sales over $1 million, the percentage of listings over $1 million, the average price for a home, the percentage of international and other non-local buyers, the recent market record sale price, and the percentage of secondary homes. Giving those particular factors, it's not a surprise Miami ranks so high.
Of course, Miami has seen some recent vulnerability in its most common market of international buyers, but a single sale helped Miami jump in the rankings.
"Miami achieved a local record sale ($55 million for a new-build penthouse), which offset declines in overseas and cash buyers, ensuring a solid performance in the Luxury Index," reports Christies.
The sale in question was hedge fund manager Ken Griffin's $55 million purchase of the penthouse at the Faena House in mid-Beach. Interestingly, Griffin has already put the unit back on the market for $73 million.
Griffin's Faena purchase was the 13th most expensive residential real estate buy anywhere on the globe in 2015.
Christie's warns, however, that Miami may see a downturn next year.
"New luxury stock and slowing buyer demand evidenced in late 2015 and early 2016 however, is likely to move it down in next year’s rankings," finds the report.
Miami wasn't the only market that saw a single mega-sale help prop up the rest of the market.
"Interestingly, the other three cities that recorded higher than ever top sales — Hong Kong, Miami, and Singapore — all saw a contraction in their overall luxury sales volume," reports Christie's. The record sales are a testament to the enduring popularity of these cities with [Ultra High Networth Individuals] preferred locations for prime property investment."
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