London and New York remain the critical cities for the world’s wealthy with more ultra-prime property transactions ($25m+) in 2022 than in any other global market, according to The Wealth Report, compiled by Knight Frank.

Some 43 transactions above this level took place in each city last year, representing a 26% increase in sales in London compared to 2021, but a 35% decline in New York.

Ultra-prime sales in London hit their highest level since 2014. Los Angeles comes in third place with 39 sales, with Hong Kong (28) and Miami (23) making up the top five.

Liam Bailey, global head of research at Knight Frank said: “Despite rising economic headwinds and growing uncertainty, the world’s wealthy have been committing to luxury residential property, with London and New York the standout cities in demand for ultra-prime sales. While a slowdown in high-end sales is likely this year, the reopening of China and ongoing appetite for lifestyle led purchases will support activity.”

The strength of the ultra-prime market in 2022 was supported by a flurry of US$25m+ new build completions. In addition, pent-up demand following Covid-19 was a factor, with several buyers having not been able to travel to view properties in 2020 and 2021.

Late 2021 and early 2022 saw many wealth creation events with, for example a resumption of M&A activity in global financial centres following the pandemic hiatus – this activity supported transactions in the first half of 2022.

While the pandemic had seen a huge shift in demand towards non-urban markets, especially 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.

The strong showing for sales in London last year occurred against the backdrop of the introduction in the UK of the Register of Overseas Entities, which was announced in late February 2022. The regulation mandates that all overseas entities that own property in the UK, register their beneficial owners. This additional level of transparency moves the UK well ahead of other comparable countries in terms of the publication of ownership data, which prompted speculation in 2022 as to whether some buyers would be dissuaded from entering the UK market.

Bailey continued: “Our data suggests that the UK’s introduction of the Register of Overseas Entities, did not adversely impact demand for high-value properties. The UK’s leading position on beneficial ownership transparency, compared to other comparable jurisdictions, may not suit all potential investors, but it appears that for the majority that market transparency can be an attraction, serving to bolster the UK’s reputation for strong governance.”

The Wealth Report also reveals the number of transactions that took place in 2022 in the super-prime market ($10m+), with a significant 1,392 sales above this level transacting across the 10 key global markets analysed in 2022. While this represents a decline to the record-breaking 2,076 transactions recorded in 2021, it is still 49% above 2019’s total and equates to US$26.3 billion in sales.

New York retained its crown as the most active super-prime market with 244 sales of US$10 million or more taking place. Los Angeles and London complete the top three with 225 and 223 respectively. The scale of the US super-prime markets aligns with prime price growth, while New York only saw 3% growth last year, Los Angeles managed 8% and Miami surged with 22% growth.

As with many market segments, the second half of 2022 saw a slowdown in transactions as the cost of debt rose and talk of recession began. However, the decline was moderate with 44% of transactions taking place in the final six months of the year.

Surprisingly, European cities were most resilient. Both Geneva and Paris saw their super-prime sales grow and London’s sales numbers dipped marginally with only two fewer than 2021.

Flora Harley, research partner at Knight Frank, said:“After the anomaly of 2021, 2022 was something of a transitional year. Some pandemic trends continued to play out, while mounting headwinds promoted some to reflect on their assets and investment strategies. In 2023, it is likely we will see this process of normalisation continue as transaction levels revert to pre-pandemic levels, down on the past two years but still highly active.”

High-end activity:

The number of sales in super-prime (US$10m+) and ultra-prime (US$25m+) market segments across 10 global locations

Sources: Knight Frank Research, Douglas Elliman, Naef Prestige, HM Land Registry, LonRes

Exchange rate calculated as at 30^th December 2022