20 Hottest Luxury Real Estate Markets: 2022

Luxury home prices burst out of their pandemic doldrums in 2021 and became the asset class of choice for ultra-wealthy individuals around the world — those with net assets of $30 million, including primary residence, according to Knight Frank’s analysis of 100 cities.

The value of the Knight Frank Prime International Residential Index, the PIRI 100 — which appears in the firm’s 2022 edition of The Wealth Report — increased by 8.4%, up from slightly less than 2% in 2020. This was the biggest annual increase since the index’s rollout in 2008.

The firm gauges prices in each market by tracking a “basket” of properties at each of its offices. Each basket is reviewed annually to ensure it’s representative of the local market’s prime real estate and consists of properties Knight Frank has in-depth knowledge of, according to the real estate firm.

Of the 100 luxury residential markets tracked, 35% of locations experienced price increases of 10% or more, while only seven markets saw decreases.

The Americas were the best regional performer, posting average growth of about 13% and placing six cities among the top 10. Asia/Pacific increased by 7.5%, mainly driven by Australasia’s 12.3% rise; Asia alone increased by 5.5%. Europe, Middle East and Africa posted average growth of 7.2%.

The report cited these factors as driving demand last year:

Low interest rates and availability of cheap finance
Shortage of prime stock
Rising wages and accrued savings in lockdowns (U.S. households amassed $28 trillion during the pandemic, according to Oxford Economics)
Strong equity market performance and record bonuses
Reassessment of housing needs and lifestyles
More flexible working patterns
Wealth creation: 5 million new millionaires globally in 2021
Appeal of property as an inflation hedge