Shared from the Sotheby's International Realty 2024 Mid-Year Luxury Outlook Report
Philip A. White Jr., president and chief executive officer of Sotheby’s International Realty, shares his thoughts about the real estate market and the company’s plans for the future.
As president and chief executive officer of Sotheby’s International Realty, Philip A. White Jr. oversees the brand worldwide. The company has a presence in 83 countries and territories, where more than 1,100 offices and 26,400 sales associates handled US$143 billion in property sales in 2023. He spoke to us about whether economic developments in 2024 played out as expected, how the shift to remote work has affected home-buying, which international markets are growing in appeal, and other trends in store for prime property markets in the months ahead.
Photo credit: Karen Sharf, Daniel Gale Sotheby's International Realty • Lands End Manor Road Locust Valley, New York, 11560
At the beginning of the year, you saw high-end sales continuing as we moved out of a post-pandemic economic downturn. Did that pan out as you expected?
Yes, I believe it did. Despite market adjustments, the demand for luxury properties remains steady. In the first quarter of 2024, we achieved notable milestones, setting new benchmarks in various regions.
In Palm Beach, Florida, we brought the buyer to the sale of a waterfront estate for US$74.25 million, the highest sale in the first quarter of 2024 for the town. Another one of our companies achieved a record for the Washington, D.C. area, with the sale of an equestrian estate for US$14.75 million, which was the most expensive in that area to kick off the year. In North Carolina, our affiliate closed on a property in Kure Beach in March 2024 for US$9.2 million, which was nearly triple the previous high sales price in the area. The company also facilitated the highest-priced single-family home transaction ever recorded on Topsail Beach in Pender County in May 2024, further demonstrating the appeal for premium properties that offer an unparalleled living experience. We also continue to see international success. Our affiliate in Dubai achieved the sale of a home in Emirates Hills for US$40.2 million, marking the country’s third-highest villa sale in 2024.
Our first quarter of 2024 was impressive and illustrates that luxury listings continue to outperform the general market. We know that exceptional properties in sought-after locations are attracting strong interest and will often sell at premium prices. I look forward to a strong remainder of the year.
A major topic of discussion for 2024 has been the long-awaited fall in interest rates in the U.S. How do you see this playing out in the second half of the year?
Many industry forecasts anticipate that the Federal Reserve will lower interest rates later this year, which will likely be influenced by broader economic conditions and the continued focus on inflation reduction. But while interest rates impact everything, for the luxury buyer, the performance of the stock and equity markets plays a bigger role in their purchasing decisions.
These luxury buyers often buy properties in cash and, recently, we noticed a growing trend for all-cash transactions. Notably, the stock market was up 20% last year, and it is up this year, too, which also drives purchasing behavior. This positive momentum not only reflects investor confidence but also plays a large role in the purchasing decisions for luxury buyers.
Another important subject is the recent legal settlement by the National Association of Realtors that has generated a lot of questions about how buyers and sellers will work with brokers. What impact will this have on the high-end property market?
The settlement has certainly stirred discussions within the real estate industry and beyond. We’ve seen the headlines, but what the news doesn’t cover is the value a trusted real estate advisor provides when you’re making one of the biggest financial and personal investments of your life. There are clear benefits and advantages in working with a real estate agent. They can provide in-depth market knowledge, advise on pricing strategies, negotiate, and help navigate sales contracts.
What our goal is, and has always been, is to provide high-quality, above-and-beyond service to our clients. Our agents are deeply involved in the communities they serve, so their expert knowledge is an asset for buyers looking to purchase a home in a place they may have never lived before. Clients also benefit from the global nature of Sotheby’s International Realty, which means they can buy and sell a home anywhere in the world.
For sellers, there has been a shifting market, and it can be overwhelming. There is no one better to advise them than an experienced real estate agent who can recommend the best time to list and assess the value of their home. Nothing compares to the value our agents bring, and it is because of them that buyers and sellers can feel assured when making these momentous purchasing decisions.
A recent report found that many white-collar professionals are living farther away from their companies’ headquarters than used to be the case. How has this affected property demand, and do you think this trend will continue?
The post-pandemic shift to remote work has significantly influenced demand and spurred increasing interest in suburban and rural areas, impacting inventory and driving up values. This “zip code shift” has enabled people to work from almost anywhere. Interestingly, the trend seems to be particularly popular among buyers seeking family properties.
Buyer preferences have evolved, and we’re still seeing interest in home features like outdoor space, gyms, and dedicated offices. The flexibility offered by remote and hybrid work has enabled buyers to strike a better balance between work and lifestyle, further influencing their property preferences and location choice. What we saw during the pandemic continues to ring true—buyers want bigger homes, and often, these are found outside of urban city centers.
However, we’re also witnessing a leveling out in markets that experienced a surge in interest immediately following the pandemic. As many individuals are drawn back to the allure and vibrance of city life, and with more workers choosing to return to office environments (with many being required to do so), certain migration patterns that were accelerated during the pandemic may begin to diminish.
Photo credit: Kerry Oman and Thomas Wright, Summit Sotheby's International Realty • 7600 E. Deer Knoll Drive, Heber City, Utah 84036
We have also seen housing prices and the cost of living rise in once more-affordable locations such as Florida and Texas, bringing them closer to expensive locales like New York. Are these places still appealing to homebuyers, or are they turning their attention elsewhere?
According to the U.S. Census Bureau, Texas was the most popular state Americans moved to in 2023. Although inflation and escalating housing costs have affected these states as well, individuals considering a relocation from New York, for instance, can still find cost savings. Texas remains an attractive destination for buyers, largely due to its favorable climate and the absence of state income tax. Florida maintains its appeal for similar reasons.
However, we’re seeing buyers also expanding their interests. Some who may be heading to markets such as Florida are stopping along the way and exploring new locations, such as the Carolinas. In fact, South Carolina surpassed Florida as the fastest growing state in the nation in 2023, according to the U.S. Census Bureau. The state of Georgia can also be counted among the Southern states growing in popularity. Tennessee has continued to see interest, alongside Maine and Colorado. The Hudson Valley in New York remains popular, too.
Which international markets are growing in appeal?
In the EMEIA region (Europe, the Middle East, India, and Africa), France and Italy continue to hold appeal for buyers. Our affiliate in Paris had a sale above €20 million and Italy sold a property for €26 million in the first quarter of 2024. There were several significant sales in the U.K. as well, so the market continues to see interest from luxury buyers.
In the Caribbean and Latin America, the hot markets continue to be the Bahamas and Turks and Caicos. Mexico is also seeing strong growth, especially with North American clients.
In the Asia Pacific region, Hong Kong is experiencing a resurgence based on the elimination of additional buyers’ stamp duty. Overseas purchasers now pay only 4.25%—the same as locals. Mainland China residents are taking advantage of the changes, as are many expats, high-net-worth individuals, and professionals looking for investment opportunities. Japan is also continuing to see interest from overseas purchasers who are looking beyond Tokyo to markets like Niseko and Kyoto. In Australia, the state of Queensland continues to benefit from inward migration trends and infrastructure development related to the 2032 Summer Olympics is driving interest in Brisbane.
What are your own expectations for Sotheby’s International Realty in the coming months and into next year? What are you most excited about?
I am proud to say that we’ve had a strong start to the year. We have made significant strides in expanding our global presence, with the establishment of new offices and partnerships.
We launched Poland Sotheby’s International Realty in April 2024, and we continue to seek out strategic growth opportunities. We are particularly energized about our growth prospects in the U.K. and Spain, and our continued expansion in Australia and New Zealand. In the Caribbean and Latin America (CALA) region, we will also represent the new Four Seasons residences in St. Kitts and Nevis, which is an exciting development.
Beyond expansions, I’m looking forward to continuing our strategic partnerships. Our experiential popups with Sotheby’s auction house and Art Basel Miami Beach underscore our commitment to meeting our clients where they are. I’m also optimistic about the brand’s continued digital-first approach, which is crucial to connecting with today’s consumers.
From our award-winning website, to embracing the power of social media and engaging with notable personalities, our digital-first approach has allowed us to extend our reach and engage with our audience more effectively. In fact, we’ve seen celebrities viewing our content more frequently, resulting in listings going viral. We are encouraged by the positive response and look forward to building on this momentum throughout the year.
Read the full mid-year report here and connect with me via email [email protected] or on social media.
Photos credited to their appropriate sources throughout. Banner photo atop page: Todd Peter and Frances Peter, Sotheby’s International Realty – Palm Beach Brokerage
