The 2020 pandemic might have upended the notion of the traditional workplace and redefined the home, but it hasnt stifled a thriving luxury real estate market. Savvy buyers are poised to capitalize, cheered by interest rates that dropped as low as 2.86 percent in November 2020 and GDP predicted to rise by 4.2 percent in 2021. Having celebrated a 60-year record in total transaction volume in 2020, we can share the Sothebys International Realty Luxury Outlook for 2021 with much optimism.

Here are the key trends to look out for as 2021 unfolds. 

The rise of seasonal towns and secondary cities

Its been hard to ignore the style-magazine obituaries for the luxury city apartment in 2020. With many downtown offices operating on a skeleton staff, newly remote workers have been quick to consider relocation to homes and communities with more space, privacy and natural beauty. Although some new states have appeared on the wish list Montana and Wyoming, for example most flight from city penthouses and apartments is to areas with a well-established luxury market:

Americas favorite luxury escapes

• Rocky Mountain ski resorts: Vail and Aspen remain popular, with sales volume for the latter hitting $1.5 billion in Q3 2020. 
• South Florida sun belt: Low property taxes and no state income tax make Palm Beach, Naples and Miami perennial hot spots. Sales of million-dollar single-family homes in Palm Beach County increased by 160% in 2020. 
• East Coast retreats: Nantucket and the Hamptons both continue to provide luxury refuge from Manhattan.
• California dreaming: West Coast investors are flocking to the natural beauty and lifestyle of Sonoma, Monterey and Carmel in particular. 
• Texas tech boom: Silicon Valley folks continue to decamp to the Lone Star State, fueling high-end interest in affluent areas such as Dallas, Fort Worth and Austin.  

Investment in Europe follows the same pattern, with a spike in interest for properties in Tuscan wine country, Alpine ski resorts or the outdoor spaces and low tax climate of the French Riviera. 

Swooping in for the top city trophy properties

2020 was the year of the second home as an escape to locked-down city living, but the real estate market in areas such as Manhattan and London only went on pause, not into a death spiral. Both New York City and London remain highly attractive investment destinations for the growing number of high-net-worth individuals with $50 million or more. There are 89,630 in the U.S. alone, and 22,417 in China, hungry for opportunities and willing to invest $10 million or more in a property. We expect London in particular to return slowly to its 2014 peak, especially while the stamp duty (a kind of land tax) holiday is still in effect. 

Shifting tax policies

As the world continues to emerge from the pandemics effects, investors face a mixed bag of prospects in relation to tax. On the one hand, governments are committed to recouping lost revenue from the pandemic and will inevitably revisit property taxes. The UK and Canada, for example, are targeting non-resident buyers and non-occupied properties, such as second homes or vacation homes. Greater wealth taxes on high-net-worth individuals are also likely. In the U.S., the Biden administration has pledged to raise taxes on those with an income over $400,000 per year, while high-end property owners in New York City are going to feel the effects of the 10-percent pied-a-terre levy. 

There is some good news, however. For investors prepared to look further afield, certain areas offer tax relief through a reduction or suspension of stamp duty. The Turks and Caicos or New South Wales and Victoria in Australia are notable examples. 

Golden Visas for investors

A growing number of countries are attracting high-net-worth buyers with a fast track to residency via investment. These Golden Visa programs are already active in several Caribbean island nations, including Barbados, Saint Kitts and Nevis, Saint Lucia, Antigua and Barbuda, the Bahamas and the Turks and Caicos. For the investor, its a tropical escape to a turnkey property on an island with relatively low Covid-19 rates. Investors who want to prepare a seamless route to EU residency can take advantage of Golden Visa programs in Spain and Portugal, while Singapore and Thailand head up the Southeast Asian hot spots. 

The upgrade to super-luxury

This years must-have is a view. In the post-pandemic landscape, buyers are focusing on areas with outstanding natural beauty even if it means compromising on proximity to major financial centers or transport hubs. The return on investment is more space, greater privacy and room to breathe, sometimes literally. Auckland in New Zealand is the current dream destination, with luxury property prices up 17 percent in 2020, the highest average increase in the world. For buyers looking to escape the mayhem of the pandemic, the unspoiled beauty and tranquility of the Southern Hemisphere city, coupled with New Zealands outstanding handling of Covid-19, is a compelling draw. Tel Aviv in Israel is hot property, too, and now ranks among the worlds most expensive cities. An abundance of tech start-ups keeps the local economy firing, while the Golden Kilometer on the seafront is an enticing location for a waterfront home.

Stronger shades of green 

Millennials are now the largest adult generation, numbering more than 72 million in the U.S. Equipped with an entrepreneurial mindset, theyve seen their average income increase tenfold and now account for a third of luxury-goods sales. Millennials are a growing force in luxury real estate, too, but theyre looking for properties that align with their interests and values. That means exerting greater pressure on the need for sustainable, eco-friendly green homes that are compliant with environmental certifications. 

These are just a handul of the key trends in the new global luxury. To explore the future of real estate in full detail and savor the insight of Sothebys International Realty, dive in and devour the Luxury Outlook for 2021.

Pictured at top: an extraordinary contemporary luxury home available for $5,895,000 at 4130 Cochran Chapel Road in Dallas