2017: A Year of Uncertainty and Record-Breaking Real Estate Deals

In 2017, luxury global real estate markets had to jump a lot of hurdles. In London, Brexit threw a healthy serving of unpredictability into the market, while in U.S. cities, a new president and a new tax plan were major influencers in how people planned to part with their cash.

"2017 has been a year defined by uncertainty, a state of being that is never great for real estate," said Jeremy Stein of Sotheby’s International Realty. Though Mr. Stein was talking about New York City, his comments could apply to many of the major global markets.

"By September of 2017, it started to feel as if buyers had come to understand that uncertainty is simply the new way of life in our new world order," Mr. Stein said. "As such they started to grow more comfortable with being uncomfortable, enough so as to actually move on with their lives and start buying property despite not feeling certain of what the future holds."

Indeed many notable transactions were brokered this year, defiant of any external influences. Here’s a look at some of the most important and priciest deals made in 2017.

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NEW YORK

In New York City, a wealth of inventory and a lack of demand contributed to a price drop in Manhattan’s luxury real estate prices this year.

October data showed the median resale price of luxury homes—defined as repeat sales within the top 20% of the market—in the borough dropped 2% year-over-year to $4.317 million, the lowest level since 2014, according to a StreetEasy market report released in November.

Sellers were also willing to slash prices. Take for example the two-unit spread at Trump International Tower that had a 31% price cut in November. Or the Plaza Hotel apartment that listed in November for $25 million, an almost 50% discount from its original asking price in 2014.

New luxury developments were cutting prices too. As buildings vye for buyers’ attention, price cuts in the 3% to 8% range were typical, Susan de França, the president and CEO of Douglas Elliman Development Marketing, told Mansion Global in November.

Despite the luxury lull, some big ticket transactions defied the market. Earlier this month, a contract signed on a roughly $80 million townhouse, according to the Wall Street Journal, a potentially record breaking price for a house in the city. The townhouse on East 69th Street, with a red velvet movie theater and panic room, is owned by Vincent Viola, the billionaire owner of the National Hockey League’s Florida Panthers, according to public records.

Big sales at 432 Park Avenue bookmarked 2017. In early January, an anonymous buyer closed on a full-floor unit at at the tower for $65.6 million, according to property records. Then, in late December, an unknown buyer purchased three neighboring units at the building. The 11,906-square-foot spread cost $91.12 million, property records show, making it the largest transaction in the building.

LONDON

In London, the luxury real estate market had to grapple with fallout from Brexit and the uncertainties around the still-undecided outcome, which many experts and reports pointed to as a reason for a stagnant residential market in 2017.

The price of property coming to market in London was down by 1.8% in 2017, according to U.K. real estate website Rightmove, which forecasts another tough year ahead for many of those looking to sell in 2018.

Though, according to research from real estate adviser Savills, prices of residential real estate in prime central London appear to have leveled out, after a 15.2% drop since the city’s peak in mid-2014. But even still, growth in regional U.K. cities is far outpacing that in London, according to Barclays Postcode Property Index released November.

Though that didn’t stop radio mogul Ashley Tabor from snapping a £90 million (US$120 million) apartment in the capital’s very swanky Knightsbridge neighborhood in April. The sale was a record for the city so far this year, according to The Times.

Mr. Tabor had planned to combine the unit with another he owns in the building, creating a combined unit that would give him a total of 10 bedrooms and more than 15,000 square feet of interior space, but was reportedly refused permission in October.  

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SAN FRANCISCO

Low inventory and high demand made the San Francisco market hot and drove up prices in 2017.

"In 2015, our market peaked as far as heat, then things cooled down somewhat in 2016," said Patrick Carlisle, chief market analyst at Paragon Real Estate Group, but in 2017 the market "went crazy," he told Mansion Global in October.

October saw the city’s median house sales price hit a new high, surging to $1.58 million, according to a November report by Paragon. A major factor in the increase was that October was a record-breaking month for luxury house sales, the report said. The month saw 38 luxury house sales above $3 million, besting the previous high of 36 sales in October 2016.

Condo sales fared better earlier in the year, peaking at a median sales price of $1.2 million in August, according to the report. While luxury condo sales performed best in June, with 53 transactions.

In March, the sale of a Gold Coast spec home set records. "Listed for $40 million, it was the most expensive home ever sold in the San Francisco," said Janet Feinberg Schindler, a Sotheby’s International Realty based in the city. The house has LEED Platinum certification and amenities, including a movie theater, spa and wine room as well as green features including irrigation with recycled rainwater, solar panels, and radiant heat.

In May, in the wider Bay Area, the sale of a 7,550-square-foot home on slightly less than an acre for $30 million in the Professorville neighborhood of Palo Alto "confirmed Palo Alto’s status as the highest priced land in the Silicon Valley," said Michael Dreyfus, president of Silicon Valley, Golden Gate Sotheby's International Realty.

MIAMI

Miami’s luxury market had to grapple with mother nature in 2017, more than any other prime market.

Hurricane Irma struck Florida in September, causing between $32 billion and $50 billion in insured losses across the U.S. and the Caribbean, according to AIR Worldwide, a catastrophe-modeling firm and killing dozens of people.

After weeks of delayed inspections, appraisals and closings following the hurricane, residential real estate sales in the city had bounced back by October, according to a report released in November by the Miami Association of Realtors.

The luxury market, defined as sales over $1 million, saw big gains in October. Luxury single-family home sales jumped 22.2% year-on-year, while existing luxury condominium sales rose 9.8%, over the same time, according to the report.

In April, the four-story penthouse at the top of Sunny Isles’ Porsche Design Tower closed for $25 million. The building’s highest and most expensive unit has nearly 20,000 square feet of living space and room for 11 cars. The building, which was completed in March, according to a representative for the tower, comes with a high-powered automobile elevator, that transports drivers and their cars from street level to parking at their apartments.

Then in October, Steve Hafner, chief executive of Kayak Software Group–which operates travel website Kayak—went into contact to buy the penthouse at L’Atelier in Miami Beach, which was asking $21 million, the Wall Street Journal reported. The condo will have nearly 8,000 square feet of interior space along with a 40-foot-long pool.

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SYDNEY

This was a record-breaking year for luxury Sydney real estate, and there is "no doubt" that Australian prestige property is finishing 2017 on a high, according to Craig Pontey, director of brokerage Ray White Double Bay.

In April, an estate called Elaine in the affluent Sydney suburb of Point Piper sold for more than A$70 million (US$53.66 million)—setting a new sales record for a house in the country ever.

The Fairfax family, founders and former owners of one of the largest media companies in Australia—including The Sydney Morning Herald, Domain Group and The Canberra Times—owned the Victorian mansion for 126 years before the sale. It was bought by Scott Farquhar, co-founder of the Australian workplace software company Atlassia.

More recently, in December, a multi-million dollar waterfront mansion in the Sydney suburb of Vaucluse sold after just eight weeks on the market. It was listed in October for A$70 million (US$53.75 million), though Mr. Pontey, who handled the sale could not confirm how much it had sold for.

Mr. Pontey said a highlight of 2017 was the "speed of the transaction," and noted that the Australian stock market has also had a strong year.

Knight Frank’s most recent Prime Global Cities Index, which tracks the movement of luxury residential prices across 41 cities around the world, found Australasia was the strongest-performing world region on an average basis for the third quarter of 2017. Sydney had remained in the top 10 cities for growth for 10 consecutive quarters.

LOS ANGELES

The City of Angels became the city of nine-figure homes in 2017, with the priciest—in the city and the country—being the listing of the mansion from the 1960s TV-series "The Beverly Hillbillies," which hit the market in August for $350 million.

But while Los Angeles has one of the healthiest high-end property markets in the U.S., prices aren’t all astronomical, according to a third-quarter report released in October by Douglas Elliman. The median sales price for luxury single-family homes, defined as the top 10% of the market, was $9.3 million—unchanged from a year ago, and hundreds of overpriced luxury properties dropped from the market in 2017, leaving inventory at about 60% of what it was last year, the report said.

Properties saw big cuts too. Opus, a Beverly Hills spec home that released an unusual promotional video featuring gold-painted women writhing next to a Lamborghini, dropped out of the $100-million-club in September after a $15 million price cut. It was joined by a 31,000-square-foot mansion in Bel Air. The spec house was first listed in July for $100 million, but after being taken off market, was relisted in November for $90 million.

Naturally, though, some big price tags were turned into big deals this year.

In August, music power couple Jay-Z and Beyonce dropped $88 million in an off-market deal for a spec-built compound in Bel Air, according to multiple reports. Designed by architect Paul McLean, the 30,000-square-feet estate is hidden behind iron gates and comprises six buildings with a total of eight bedrooms and eleven bathrooms.

The transaction just topped the off-market sale of the Malibu home of entertainment mogul David Geffen, who in May, parted with his long-time home for $85 million. The property has five different structures, including a main house of more than 10,000 square feet, guest houses, a pool, hot tub, reflection pond and multiple balconies and terraces looking out over the Pacific.

Though the sale is currently the record holder for any property sold in Malibu, it has competition hot on its heels. In December, Mansion Global reported that the Malibu home belonging to Kurt Rappaport, co-founder and CEO of Beverly Hills-based Westside Estate Agency, is set to sell for $120 million, according to a source with knowledge of the off-market deal, though according to reports it’s not a done deal yet.

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DUBAI

In 2017, Dubai’s property market showed signs of recovery after years of being squeezed by regional economic conditions, like dropping oil prices. Since its peak in 2013-14, residential prices have been in a state of decline until bottoming out at the beginning of 2017.

The Dubai Land Department announced more than 52,000 real estate transactions—including mortgages and home, land and building sales—totaling AED 204 billion (US$55.54 billion) in the first nine months of 2017, an October report said, with sales volume the highest in pricey central neighborhoods around the iconic Burj Khalifa tower.

For developers looking to impress with amenities, healthy living was the theme of the year.  The latest launches coming to the market offered space, vegetation and more of a connection to the outdoors, Mansion Global wrote in September.   "Luxury property purchases tend to set bar for the entire property market. Affluent high value sales build confidence, and if an individual is prepared to place hundreds of millions into Dubai realty, others follow that sentiment," said Chris Whitehead, managing director, Gulf Sotheby's International Realty. "These sales also set standards, and so many of the amenities and features that are currently trending in the luxury market sector tend to trickle down throughout the entire marketplace, making all sectors more appealing to purchase as trends are copied."

One of the most expensive residential real estate deals in Dubai this year closed for AED100 million (US$27.23 million), a sign, perhaps, that the luxury market is indeed perking up. The sale of the 42,000-square-foot villa marked what brokers called the most expensive transaction in the upscale community of Emirates Hills—a knock-off of Los Angeles’s posh Beverly Hills built around The Address Montgomerie Golf Club, Mansion Global wrote in July.

In September, a penthouse apartment which was purchased for AED102 million (US$27.77 million), may be the most expensive apartment ever sold in the United Arab Emirates city, according to the building’s developer.

The unit at One Palm, a 90-unit cantilevered tower built by developer Omniyat on the eastern tip of the Palm Jumeirah’s trunk, is thought to have snagged the top-apartment-sale title from a unit at the Bulgari Resort and Residences that sold earlier this year for a comparatively paltry AED60 million (US$16.33 million).