Millennials, expats and sustainability are driving real estate prices higher – Sotheby’s predicts big gains on UK serviced residences and luxury homes in Australia and New Zealand

Feb 8 , 2022

Trends in residential markets for 2022: high-end lifestyle properties like this one in New Zealand are popular with expats returning home after years lived in Asia and elsewhere. Photo: Sotheby’s International Realty

The success of Bentley, Aston and Porsche towers in Miami is encouraging more branded living complexes, according to luxury real estate consultancy Graham Associates

Hybrid home/office work and serviced apartments also driving growth, but expect higher stamp duty as governments look to recoup pandemic stimulus money

First-time buyers entering the market with help from the bank of mum and dad. Interest in serviced residences. Ethical luxury. And a new “boomerang buyer” phenomenon.

These are some of the global real estate trends identified in Sotheby’s International Realty’s (SIR) “2022 Luxury Outlook”.

On top of the price gains that many markets recorded in 2021, most industry analysts spoken to for the report predict prices will increase further throughout 2022, especially after the slower northern winter months.

In the forward, A. Bradley Nelson, chief marketing officer, Sotheby’s International Realty, notes that as borders reopen, pent-up demand from international buyers will compete for limited inventory with local buyers. That might spell good news for financial capitals, many of which bounced back more quickly than expected post-Covid lockdowns, he adds.

Cayman Island developments increasingly come with sustainability credentials. Photo: Sotheby’s International Realty

“But if 2020 and 2021 were fuelled by remote work, we’re predicting that in 2022, hybrid work is likely to drive the market, with many looking for larger homes that can accommodate remote work yet remain within commuting distance to their office,” Nelson says.

Millennials make their move

One interesting trend identified in the report is that millennials are entering the home-buying market en masse, shedding their title of the “renter generation”. This might partly be attributed to a mindset pivot as these young workers reach new life milestones, but they still rely on a leg-up from family.

“Most millennials are utilising a transfer of wealth from their parents, grandparents, or a relative to purchase property,” says Jonathan Spears, an agent at Scenic Sotheby’s International Realty, based in Destin, Florida. “And even when parents are buying, their millennial kids are often the ones making the decisions because it’ll be theirs one day.”

According to a survey by US mortgage company Freddie Mac, the number of young American adults aged 25 to 34 purchasing homes with a co-borrower aged 55 and up has been on the rise for decades, accounting for 3.2 per cent in 2018, compared to 1.3 per cent in 1994.

A classic condo in Manhattan, one of the global financial capitals drawing attention from international investors. Photo: Sotheby’s International Realty

Expats go home

The “boomerang buyer phenomenon” – attributed directly to the pandemic – is explained as a trend among expatriate workers who, taking advantage of work from home policies, are rushing to purchase property in their home countries.

Asserts the report: “Nearly two-thirds of expats worldwide had considered purchasing a property in their home country as a result of the pandemic, the Financial Times reported, with 29 per cent planning to move back full time and 57 per cent seeking a home for future use. The Economist recorded a mass exodus of expat workers from Asia, with more than 15,000 choosing to return to the US alone. This boomerang-buyer trend is set to continue into 2022.”