A Return to Traditional Centers of Luxury

After two years of looking in off-the-beaten-path locations, they may eventually return to traditional centers of luxury. U.S. cities such as New York City, Los Angeles, San Francisco, Chicago, and Boston have seen a resurgence in demand; inventory levels have declined and home prices have risen in all five markets over the last year. Global cities like Paris and London are also showing their strength, even in the face rising costs of living due to the war in Ukraine and the ensuing energy crisis. These locations tend to hold their value over time, and have maintained their reputations as safe havens for both foreign and domestic investors.

New York City

Despite more than 130,000 households fleeing New York City between March 2020 and June 2021 during the pandemic,3 the trend reversed in the second half of 2021. According to a recent survey by Bloomberg, more people are now moving into Manhattan than before the pandemic. Home prices reflect this shift.

Frederick Warburg Peters, President of Coldwell Banker Warburg, confirms the trend: “There is only one New York. 2022 has proven to be a year of population gains for the city, as many who left during the early months of COVID have returned, and many from all over the country and the world continue to recognize the city’s unique attributes. No matter who you are or what you believe, you have a constituency in this New York, the global town where everyone and everything co-exists.”

London & Paris

On the international scene, London and Paris haven’t lost their luster for investors. With the continued strength of the U.S. dollar, both cities are likely to see growing interest from U.S.-based highnet-worth property investors who may see opportunity for good investment return as these established metropolises rebound from the pandemic, inflation, and the energy crisis.

“Over the past five years, prices in London have risen by 10% – but the pandemic-fueled race for space since COVID-19 and current rising interest rates have dampened demand for London property, flattening prices,” said Alasdair Hedley, Head of International for Hamptons International. “We expect this trend to shift in 2024 and prices will accelerate by 2025 once rates stabilize. London has always held a worldwide reputation as a safe haven for property investment. If buyers can afford to buy and plan on holding their property for the long-term, London real estate will always hold its value.”

“The ‘traditional’ luxury cities and towns in France, as much from the point of view of their reputation among buyers as from the proportion of luxury properties available on the market, experienced a tremendous surge in 2021 and this continues in 2022,” said Laurent Demeure, President and CEO Coldwell Banker Europa Realty. “The sparkle has also begun to come back to Paris real estate.

After a considerable drop in the median price for luxury properties in 2020, three Parisian arrondissements – the 16th, the 2nd, and the 4th – posted double-digit gains in 2021. This upward momentum continues this year. There is no lack of investors who want to acquire property in France. Paris will always be Paris, with a strong international appeal.”