Realtor: Island’s luxury market expected to see healthy growth in 2013

After missing out last year — Bermuda’s luxury property market is expected to see healthy growth in 2013, said John Sinclair, head of Sinclair Realty, exclusive affiliate of Christie’s International Real Estate here.

Limited inventory, strong international buyer demand, and “increased appreciation for world-class lifestyle offerings” by the wealthy have all helped to push prices for luxury homes toward historic highs, according to a Christie’s study.

But, Mr Sinclair said, the Island’s luxury market did not experience resurgence in 2012 “due primarily to the uncertainties of the pivotal general election”.

“Bermuda did not follow the global trend,” he said. “However, if the tangible luxury sales activity we have already experience in the first two months of 2013 is any indicator, we expect to see healthy, measured growth in 2013.”

He added that the high-end market in Bermuda was extremely small.

And he said: “Most of the non-Bermudians who have entered sales contracts in the last few weeks, or who are considering doing so now, had already embraced the 25 percent license fee, so the surprise reduction to 8 percent is a bonus for them.

“It’s too early to gauge if the reduced license fees will really prompt action from buyers who say they weren’t buying because of the 25 percent fee. But, without question, it is easier to market Bermuda internationally to new prospective purchasers with the 8 percent license fee.”

Entitled Luxury Defined: An Insight into the Luxury Residential Property Market, the Christie’s report compares 10 of the world’s top property markets.

The Index ranks markets across key metrics including record sales price, prices per square foot, percentage of non-local and international purchasers, and the number of luxury listings relative to population.

Highlights include:

• Globally, top-tier property sales achieved record prices in several cities, remaining immune to many of the economic concerns that drive the general housing market.
• HNWIs (high net worth individuals) are often more inclined to invest in an important global market than in another city within their home country for second or additional homes.
• Prestige residential real estate values will more likely follow growth trends of non-consumable luxury goods such as fine art more so than the growth trends of the general housing market.
• Cash transactions have dominated luxury property acquisitions across many studied cities.
• Recent tax law changes in many of these markets are expected to negatively impact 2013 market activity.

Bonnie Stone Sellers, CEO of Christie’s International Real Estate, said: “Strong momentum in the luxury property market is also being driven by scarcity of quality inventory and demand from international buyers in of the world’s top destinations.”