What To Expect In Miami’s Luxury Real Estate Market During 2023

 
Inflation. Interest rate hikes. Supply chain problems. Layoffs. Crypto-crash. Now that Art Basel 2022 is a wrap, these are the buzzwords that fill news stories leading up to the end of the year. What a buzz kill. But does this tell the entire story? Not according to Knight Frank, one of the globe’s largest real estate consultancy firms.

Each year, Knight Frank publishes its annual Wealth Report. This consists of a breakdown of the world’s prime property markets. It goes through global wealth distribution and threats and opportunities for wealth in these top markets. The 2022 Wealth Report has listed Miami as the second fastest growing luxury real estate markets in the Americas with just over 28% growth since 2021.

Knight Frank Luxury Markets Growth 2022

We make it a point to remain objective about Miami’s position in the global arena, the pros and the cons, and what needs to happen in order to ensure we remain perched at the top of the list. For 2021-2022, the growth was largely fueled by the aftermath of COVID-19 and then intensified by Florida’s tax climate paired with Miami’s collaborative business culture.

Let’s be honest. If we are forced to quarantine in place and remote working is a viable option, are you going to work remotely in a snowy, dreary climate with excessive taxes, or would you rather quarantine in a sunny climate that invites breezes coming through open windows as you collaborate with others in your field without the worry of excessive taxes? The answer is clear.

All of these positive attributes aligned and created a run on the luxury real estate market, throughout Greater Miami (including Coral Gables, Coconut Grove, Downtown Miami, Edgewater/Wynwood, Brickell and Miami Beach). Available inventory was snapped up at record pace and for record prices, yet the prices were still viewed as a bargain for New Yorkers who are accustomed to price tags over $5,000/square foot. In turn, the prices of luxury properties rose over 28%.

Is this growth sustainable?

Now that we are inching closer to 2023, the Fed has steadily raised interest rates, inflation has hit an all-time high, FTX bombed the already struggling crypto market big time and a new Presidential race is beginning to simmer in the wings. Will we crash or will we continue?

It would be very easy to say that because of the crypto markets alone, Miami should prepare for a hit. Knight Frank does not share this sentiment, having ranked Miami again as the second overall market for the high-end housing market. It does predict a slowdown, but not a bust.

Rather than the unheard of 28% growth, we should expect a 5 percent price growth in 2023. This may seem like a stumble, however compared to the 2 percent growth anticipated for the global luxury market as a whole and the previously forseen 2.7 percent growth for the Magic City, this really is something to celebrate and look forward to.

We are moving back into a place of stability and manageable growth. As we mentioned last week, both the art world and the real estate markets are trending toward traditional, tangible choices. Kitschy digital art did not sell as well at Art Basel as it has in recent years, and the new luxury developments that are performing the best are those with a timeless, elegant feel.

Examples, please.

Lest we all forget the banana duct-taped to the wall that sold for over $2 million at Art Basel Miami Beach 2019. This year’s viral piece was an ATM that doubled as a leaderboard, ranking attendees by their bank account balance. It did not sell, but was an awful lot of fun and an amazing conversation piece, even if the novelty does wear off as quickly as the 2019 banana on the wall turned brown. While gallerists noted a drop in digital art sales, there was an uptick in more traditional works by artists who used more traditional media.

Rather, paintings by Agnes Martin and Phillip Guston were trading for $7 million. Warhols were changing hands. The same holds true for the real estate presented. The real estate projects that fared the best were timeless. Exclusivity and privacy took a front seat to overt opulence and garish finishes. Six Fisher Island Drive was one of the standouts of this year’s fair. This is the new development that is already infamous as being so exclusive, you have to be invited to even consider purchasing.

Other new projects that we are seeing perform increasingly better over recent months are those that have solid brand names such as St. Regis Sunny Isles (pictured above), Cipriani in Brickell, and Waldorf Astoria Residences in Downtown Miami. Another strong sector in luxury Miami real estate is new developments that pay homage to nature and wellness. We are very excited to see these projects come to fruition and contribute to the evolution of Miami’s always-changing skyline.

If you are interested in speaking more specifically about a neighborhood, project or listing, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com.