Despite the vast destruction of the recent Los Angeles wildfires which destroyed some 12,000 structures, many of which were pricey single-family homes, the world’s high-end housing market is poised to settle into a comfortable rhythm according to Sotheby’s International Realty’s 2025 Luxury Outlook report.
“The L.A. fires are devastating, particularly when you think of a personal and human level,” says Bradley Nelson, the company’s chief marketing officer, who spearheaded the report. “In terms of how long it will take to show up in the real estate market, it is a little too soon to tell. The majority of families right now that have been displaced are really looking for near-term solutions.”
The rest of the world, though, is anticipated to coast in something close to neutral after years of post-pandemic upheaval caused by interest rates, geopolitics and remote work.
“I don’t think we’re predicting real estate to decrease in value in 2025, but the rate of appreciation might be slowing,” says Nelson. “After we did this survey of our top agents on a global basis, doing more interviews than we can count, these sales folks on the front line say it feels like a more stable market, with more balanced conditions,” albeit with strong currents beneath the placid surface.
The world’s rich, first of all, are on the move. Sotheby’s cites a Henley & Partners report that anticipates 135,000 high-net-worth individuals migrating to new countries in 2025, up from 128,000 in 2024. The biggest beneficiary seems to be the United Arab Emirates, which welcomed a record-breaking 6,700 new high-net-worth residents in 2024, with more set to follow.
“It’s a wealth magnet,” Nelson says, “with people coming from the UK and Europe and elsewhere.” He cites tax incentives, golden visas and the lifestyle of certain UAE destinations — Dubai in particular — as draws. There, branded residences are particularly sought-after. “These homes can easily command premiums upward of 25% for roughly the same size and quality as their unbranded counterparts,” says Chris Whitehead, managing partner, Dubai Sotheby’s International Realty, in the report.
Conversely, while the U.S. had the second-highest inflow of rich homebuyers last year, it saw the lowest level of international buyer purchases since 2009, Sotheby’s says. Between April 2023 and March 2024, these buyers acquired just 54,300 homes totaling $42 billion. Compare that to 2017, when foreign buyer activity amounted to $153 billion for 284,500 units.
Still, Nelson says, “there were some very expensive purchases made by that audience, so I still think that it is a critical component of the buyer pool for the truly super prime real estate.”
In the year ahead, there could be an uptick of foreign activity. “In general more stable inventory levels probably makes buying more attractive,” Nelson continues, “just think of the practicalities of someone purchasing in the United States that lives in a different country. If things are selling in a matter of hours or days, it’s kind of impossible to even get here to look at a piece of new inventory.”
Different buyers
The people doing the buying have also changed. As millennial buyers enter luxury markets in increasing numbers, this younger generation is behaving differently than its predecessors. “Their priorities are really driven by a kind of lifestyle-first mentality,” Nelson says.
In practical terms, Nelson says that brokers around the world are seeing a younger generation gravitate towards aesthetically pleasing, historic properties, often driven by pop-cultural touchstones.
In Italy, the report cites “The White Lotus Effect,” quoting Diletta Giorgolo Spinolo, head of residential at Italy Sotheby’s International Realty, who says that immediately after the HBO show’s second season aired, which featured scenes in gorgeous historic Italian villas, “we had twice as many American and British buyers looking there.” It could be, she speculates, that “younger people understand that owning a piece of history is a status symbol. TV shows are definitely shaping their perceptions of what luxury is.”
Investment potential
The luxury buyer might be changing, but the money, the report posits, seems to be coming from the same place as ever: Even the richest buyers are still asking their parents for help.
Sotheby’s references a report from U.K. financial services firm Legal & General that found that 42% of U.K. properties purchased by people under 55 used financing from parents. Paloma Pérez Bravo, CEO of VIVA Sotheby’s International Realty in Spain, says she’s witnessed this phenomenon. “People throughout the Latin world, from Mexico, Venezuela and Miami, are happy for their adult children to study or start a company in Madrid,” she says.
Meanwhile, the gender makeup of homebuyers is also changing. Nelson cites a report from the National Association of Realtors that found that in 1981, 11% of homebuyers were women; couples made up 73% of the buyer pool. In 2024, 20% were women and 62% were couples.
“Single female buyers have confidence and a desire to purchase real estate outside of their romantic relationships,” Nelson says. “They certainly see the opportunity that it presents from a wealth creation standpoint.” It’s not just emancipated younger women doing the buying. It’s also “older single women who are downsizing and moving into homes that are more tailored to their needs,” the Sotheby’s report says.
“This report,” Nelson concludes, “is driven mostly by demographic changes, more than anything else. That really became apparent to us.”
