HNW Buyers Turn to Emerging Markets While Middle Income Buyers Are Tapped Out

Posted by Michelle Farber Ross on Tuesday, May 17th, 2016 at 1:39pm.


A recent report from Christie’s noted that HNW buyers are turning their attention away from mature real estate markets and toward emerging markets where there is more room for appreciation and less risk of economic turmoil and civil unrest. This theme emerged at the end of 2015 and continuing into 2016. While Miami is contracting, markets such as Auckland and Jackson Hole are booming. In South Florida, towns such as Delray Beach continue to be a very hot market. We’ve seen a big drop in luxury sales in Miami, while sales in secondary beach communities continues to be fairly strong.

Across the board, buyers are more cautious and mid-tier properties are barely moving. As we’ve noted in the past, we’re seeing sales in the lower tier markets but mid-tier inventory is at a stand still, and this phenomenon is widespread and global due to the middle class taking financial hits and facing shrinking incomes. Middle income buyers don’t have the cash to purchase. Middle class buyers are looking for low priced homes that don’t carry a lot of overhead. A big shift in the housing market has occurred in the last six months. While its been building up for several years, it became really evident that something shifted toward the end of 2015. Real estate is going through several fundamental pivots, because the nature of buyers is changing, the market will have to adapt accordingly over the next few years.

Buyers are wary. Luxury buyers are looking for markets that possess a lot of growth potential. HNWIs want to put their money into assets that have the potential for substantial growth. New York is a very stable, safe bet but in order to hedge investments wealthy buyers are turning their attention to under exploited markets in up and coming areas where there is more potential for a short term big gain. The luxury market in mature markets has slowed down considerably from the buying frenzy we experienced the last several years. Meanwhile, a land grab is taking place in emerging and secondary markets.

The take ways:

  • West Palm Beach is poised for big growth right now, and undergoing a substantial revitalization that started more than ten years ago. West Palm Beach is beginning to take off as has Delray Beach.
  • Buyers are looking for properties in good condition with new kitchens and bathrooms. They want to purchase a house or a condo that is move in ready and have less interest in big renovation projects.
  • Through the end of the year, we expect strong sales in secondary markets, cooling continuing in Miami and turn-key properties selling the fastest.
  • Sellers in Miami will have to exercise patience and those who really need to sell their property, may have to reduce asking prices.




Yours truly,

Michelle Farber Ross

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