Hamish McDougall is Founder and CEO of Boulevard Luxury Homes.
In 10 years’ time, there will be 38% more centi-millionaires than there are today. Most, if not all of them, will be vying for trophy homes, second and third residences, and investment properties in the world’s most sought-after markets.
Residential real estate has the twofold allure of dependability and desirability. The world’s largest asset class (worth USD 287.6 trillion at the end of 2022) extended its lead over debt securities and equities, as well as commercial and agricultural property, rising 21.1% in the three years to 2022 despite a 1.6% correction in 2022. New wealth will seek a foothold in the world’s most coveted and closely held markets. Those in developing markets will seek to enter safe ports with stable currencies and lifestyle advantages. And everyone will be eyeing out the low-tax havens.
Then there’s the desire. Developers have responded with a cornucopia of ultra-luxury offerings, in a veritable arms race of amenities, proportions, and positioning. In Sydney, Crown Residences at One Barangaroo stunned the market with the launch of a AUD 100 million penthouse (that’s approximately USD 63,000), only to be gazumped by the triplex super-penthouse at One Sydney Harbour, which offers nine bedrooms across more than 17,000 ft2, complete with a private rooftop pool, and sold off the plan for AUD 140 million (approximately USD 88 million). In New York, the super-penthouse at Central Park Tower has hit the market asking USD 250 million — making the world’s highest residence also the country’s most expensive property. In Dubai, the world’s first Dar Al Arkan Pagani Tower was completed in 2022, touting a penthouse of 8,207 ft2 reputedly designed by businessperson and auto-maker Horacio Pagani himself. In a sign of the changing times, rival supercar-maker Bugatti teamed up with developer Binghatti to launch their own residences just a few blocks away, with a super-penthouse sprawling across 44,000 ft2, and a price tag of AED 750 million (approximately USD 204 million).
For those who don’t require 44,000 ft2 — particularly for a pied-à-terre in Dubai — there are any number of luxury one- to five-bedroom residences asking ever-increasing prices per square foot. Condo amenities are no longer suffice with golf simulators, spas, and cigar rooms; they now include the likes of biophilic private gardens, art curation, panic rooms, and bullet-proof glass, as well as car lifts to the dedicated sky garage. Landed houses are keeping pace, with ice baths, secret strong rooms, and in land-scarce Singapore, the extravagance of an underground tennis court.
None of these property buying trends of the mega-wealthy have been lost on governments around the world grappling with housing affordability crises. Canada took the extraordinary step of banning foreign nationals from purchasing property for two years, starting 1 January 2023, in the wake of a 60% increase in average home prices in the seven years to 2022. New Zealand banned foreign buyers altogether in 2018. Back in 2009, Australia adopted a canny approach and limited foreign buyers to new housing stock, along with a supplementary foreign buyer tax of 7–8%, although in the wake of Canada’s announcement, there have been calls to adopt similar, stricter measures Down Under. And in April 2023, Singapore shocked markets by requiring foreign buyers to pay a total stamp duty of 64% — outstripping even Hong Kong at 31.3%. By comparison, New York sits at 4%, Miami at 0.5%, and the UK has held out at 2% since 2021.
For all these regulatory moves, foreign buyers made up just 0.9% of transactions in the hot Vancouver market prior to the enactment of the prohibition in June 2022. (That number spiked to 2.8% in July to December 2022 in the lead up to its implementation). In Australia, foreign buyers account for only 1% of the total market and 4.6% of new development purchases. And in Singapore, foreign nationals took out 3.8% to 4.7% of condo sales in the period 2020 to 2022, but are excluded from buying most landed properties and from the government housing program that accounts for around 80% of the population.
While the prohibitions make for popular headlines, their efficacy in abating runaway housing affordability is harder to fathom, given the sliver of transactions that foreign buyers represent. The numbers hardly bear comparison to Miami, where foreign buyers accounted for a hefty 17% of transactions in the year to July 2022 (ironically, Canadians were the top buyers). Dubai has both skyrocketed and crashed off the back of foreign investment, but appears to have learned the lessons of the 2008 financial crisis, which saw property prices collapse by 40% in the first quarter of 2009. This time around, resale values in the emirate are strong, with average prices increasing by 16.9% in the year to June 2023, and tellingly, rental yields are high at 4.93%.
Despite the varied measures to contain foreign buyers, the influx of wealth into these very markets is likely to continue, with Singapore’s centi-millionaires projected to swell their ranks by 55% in the next decade, Sydney and Melbourne by 60% and 67% respectively, and Vancouver by 67% too. Australia is also expected to gain more (regular) millionaires in 2023 than any other country, with a net inflow of 5,200, followed by the UAE, with 4,500, and Singapore with 3,200. Millionaires, and moreover, centi-millionaires, are incomparably mobile, and residence — by way of education or investment — is rarely a significant barrier if it offers a path to purchasing property.
All in all, it looks like more of an opportunity than a crisis, and at Boulevard Luxury Homes, we expect to see governments reconsider measures and adopt more nuanced approaches in the coming decade. In New Zealand, a proposal is being mooted to lift the ban for properties valued over NZD 2 million (approximately USD 1.18 million), alongside a new 15% stamp duty for foreigners. This sort of hybrid approach can capitalize on foreign demand and development opportunity without troubling the larger part of the market. Given the swelling numbers and surging wealth of the centi-millionaire cohort, we don’t expect this level of stamp duty to dampen enthusiasm — on the contrary, there may be scope to increase it. In December 2021, when Singapore raised its stamp duty on foreigners from 20% to 30%, the percentage of foreign buyers actually increased, after only a brief slump that appeared to be no more than a fleeting frustration.
It’s hard to imagine, however, that buyers will tolerate the new rate of 64%, irrespective of their burgeoning wealth. In the meantime, we expect rents in Singapore to continue to soar, and investors to seek alternatives in the comparably cheap markets of Dubai, Sydney, and perhaps Bangkok. And residence as a path to purchase will remain the default approach in otherwise closed markets, until such a time as governments start tailoring their measures to the opportunity instead of the crisis.
 Savills Research, September 2023
 The Canadian Real Estate Association, September 2023
 Rennie Landscape, April 2023
 Australian Property Investor, January 2023
 EdgeProp, July 2023
 Florida Realtors, August 2022
 CBRE UAE Real Estate Market Review, August 2023