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  • Pages
  • Editions
01 Sotheby’s International Realty 2023 Luxury Outlook Report
02 Welcome Letter
03 Contents
04 What’s in Store: Q&A with Philip A. White Jr., president and CEO, Sotheby’s International Realty
05 Strong Appeal for Luxury Property, Despite Interest-Rate Hikes
06 With Inventory Increases, Markets Begin to Turn—Slightly—in Buyers’ Favor
07 What Lies Ahead: Lessons From Past Market Corrections
08 Stability Is the Watchword in These Tax-Friendly Markets
09 Luxury Buyers Flex Spending Power—and Expand Options—in International Markets
10 An Explosion of Global Wealth, Funneled Into the Real Estate Market
11 As U.S. Dollar Surges, Americans Head Abroad
12 Eastern European Markets Entice Second-Home Buyers
13 International Buyers Line Up for Luxury in Asia
14 For Passing Wealth Between Generations, Property Is Still King
15 High-End Vacation-Rental Spots Face Changing Market Post-Covid
16 Highs and Lows: Luxury Rental Markets React to Return-to-Cities
17 Most U.S. Markets That Grew During Pandemic Are Still Strong—If Slightly Muted
18 Buyers Around the Globe Expand Their Searches
19 Naturehoods: The Great Outdoors is a Top Commodity
20 How To Sell a High-End Home During Any Type of Market
21 Supply-Chain Issues Ease, Yet Prices Remain High
22 Real Estate Industry Explores the New World of the Metaverse
23 Eco-Focus Drives Luxury Market
24 2022 Record Breakers
25 As Metaverse Evolves, Lines Between Traditional and Digital Art Will Blur
26 Investors Increasingly Turning to Wine Funds for Returns
27 Anatomy of an Of-the-Moment Home
28 Conclusion

Supply-Chain Issues Ease, Yet Prices Remain High

Supply-chain issues are still rippling through some U.S. and global markets, while others are showing marked signs of improvement. In Singapore, supply disruptions persist, as underlying factors such as the Ukraine war and China’s relatively strict Covid policies remain, says Han Huan Mei, director of research, List Sotheby’s International Realty, Singapore. “Further escalations in the Russia-Ukraine conflict could further impact global supply disruptions and exacerbate inflationary pressures through higher food and energy prices.”

Even as manufacturing shutdowns and restrictions on the movement of factory workers are being alleviated, a certain level of global and regional disruption will persist in the short-to-medium term due to ongoing border controls in mainland China, Hong Kong SAR, Taiwan, and Japan, according to a recent report from CBRE, a global leader in commercial real estate services and investments.

Over the past two years, manufacturers, omnichannel retailers, and logistics companies in Southeast Asia have moved from a “just-in-time” inventory approach to a “just-in-case” model that requires them to keep large volumes of stock on hand as a buffer to potential disruption.

“ The government also has provided extensive assistance to help contractors complete ongoing housing projects in a timely manner.”
Han Huan Mei Director of research, List Sotheby's International Realty, Singapore
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In the U.S., the city of Seattle, Washington, offers a good example of the many changes and challenges brought on by the Covid-19 pandemic.

Between 2010 and 2020, downtown Seattle was the fastest-growing large city in the U.S., with more than 27,000 multi-family housing units delivered, but the “pandemic created many direct and indirect headwinds to the pipeline,” says Dean Jones, principal and owner, Realogics Sotheby’s International Realty.

“Inflation and supply-chain issues resulted in hard costs of 30% higher than pre-pandemic, and developers still report challenges getting certain products from overseas,” Jones says.

Also, construction financing has gotten tighter, and rents have “skyrocketed based on the supply and demand imbalance, but landlords still suggest the higher cost of operations isn’t keeping up with rent growth,” he says.

As a result, “developers aren’t so much changing their product offering. They simply aren’t breaking ground,” Jones says. There are no plans for new development delivering in 2023, one in 2024, and none in 2025, he says.

In New York’s Hudson Valley, Raj Kumar, associate broker, Four Seasons Sotheby’s International Realty, says his personal experience is that supply-chain shortages have been alleviated somewhat. However, “prices for both materials and labor are significantly higher, with materials going up more than labor costs.”

In the Jackson Hole, Wyoming, market, “it’s gotten much better in the last three to six months for the construction trades—the ability to get appliances and lumber,” says Brett McPeak, associate broker, Jackson Hole Sotheby’s International Realty. “There is no lumber mill here. Every piece of building material is getting trucked in from somewhere else.”

Now, he says, “it’s down to weeks to wait for something, not months or years.”

“Things are better,” says Marilyn Wright, global real estate advisor, Premier Sotheby’s International Realty in Asheville, North Carolina. “The price of construction has stabilized, but it isn’t going down. Appliances are still somewhat of an issue.”

More from the report

20

How to Sell A Luxury Home During Any Type of Market

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Real Estate Industry Explores the New World of the Metaverse

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