From New York to Dubai, the past several months have seen soaring demand, with luxury real estate markets around the globe experiencing a strong resurgence after most Covid-19 lockdowns were lifted. 

Driven by favorable interest rates and the desire to upgrade to more spacious homes, deep-pocketed buyers are flooding markets, and in some cases have encountered tight inventory and bidding wars. In ordinary times, buyers could expect some relief in the fall months, as children return to school, the weather cools, and people settle in. Not this year, real estate experts say. 

“Traditional seasonality has gone out the window,” said Tara King-Brown, a broker with Corcoran in New York. “Folks who have the means are coming back to the city en masse, and I’m cautiously optimistic it will continue. This has been the best year in luxury real estate since 2007.” 

A majority of the demand for luxury real estate in markets like New York, Miami and London has been coming from domestic buyers, given that international travel restrictions are still in place and subject to flux. But even without the usual number of foreign investors, activity remains high.

“There’s been an uptick in Covid cases recently, which is bringing complications for international travel,” said Liam Bailey, global head of research with Knight Frank in the U.K.

“But new buyer inquiries are well above historic trends at the moment, and the driver of that is people looking to upgrade and take advantage of record-low interest rates.” 

There is still a strong impetus for buyers to seek out larger homes, as periodic lockdowns could continue, he added, so demand is expected to remain high going into the autumn months. 

The return of international buyers is a wild card in many already-hot markets. South Florida, for instance, has been booming amid the pandemic thanks to an influx of second-home buyers and migrants from other parts of the U.S., despite the lack of the usual demand from overseas investors.

“Summer tends to be a little slower because of the nature of the market in South Florida, and by the time fall comes, we tend to ramp up,” said Christine Martinez deCastro, director of sales & marketing for CMC Group in Miami. “In the pandemic we’ve already been seeing a strong market, and we still haven’t seen the full effect of international buyers.”  

With a busy fall season likely to come, luxury buyers need to inform themselves now about what to expect in their desired markets.

New York

After a huge drop-off in real estate activity during the height of the pandemic, New York is now experiencing a revival, particularly in the luxury sector. In the second quarter of 2021, luxury home sales more than doubled from a year ago, according to a Douglas Elliman report. And many New York brokers see no sign of the frenzy abating in the coming months. 

“At the end of July, we’re seeing just as much activity as we saw in the spring, and from conversations with buyers and sellers it feels to me like there will be a continuation of this at least through September and October,” Ms. King-Brown said. “Prices are going up, and there’s tighter negotiability in terms of what sellers are willing to take.” 

There has been a significant uptick in demand for new development, she added, with some new luxury buildings scaling back the concessions and deep discounts they offered earlier in the pandemic to lure skittish buyers.

One sector that could see a cooldown in the fall months: Brooklyn townhouses, a market that has heated up as former Manhattanites seek out homes with more square footage and outdoor space. 

“A lot of the demand for Brooklyn townhouses is driven by families who want to be settled in before the start of the school year,” said Lindsay Barton Barrett, a broker with Douglas Elliman in New York. “Once we get past September, we’re not dealing with buyers who are motivated by the same thing, and we may find that people are more willing to wait, so I think this fall will be a more peaceful time to be looking at real estate.” 

For now, ultra-high-end sales have not yet reached their pre-pandemic levels, Ms. Barton Barrett said, so buyers of homes asking $10 million and up may encounter less competition as well. But one potential complication is the possibility of international buyers returning, creating another wave of demand for luxury real estate. Whether travel restrictions will be lifted is an open question, but in the meantime prospective buyers should prepare to pounce when they see the right property.

“Within any market that shifts more toward a more competitive environment, you need to get your ducks in a row,” Ms. King-Brown said. “Get your team in place—your broker, attorney, mortgage broker, and architect if you’re planning to do some work. Be patient but ready, mentally and financially, to pounce.” 

Buyers who waited out the fierce competition of the spring months and kept an eye on the market may have an advantage this fall. 

“Buyers who participated in bidding wars now have all this information about where homes are trading, so they’ll have a little more leverage,” Ms. Barton Barrett said. “My hope is that all of that work will not have been for naught.”

Miami

South Florida real estate has been booming through the pandemic, and according to the Savills World Cities index released in July, Miami is the second-strongest performing city in the U.S. with a 9% price increase in the first half of 2021.

Buyers from the Northeast have been flooding the market, seeking out more space and sunshine as well as the tax breaks, but so have buyers from across the U.S., local brokers say. 

“We’re seeing buyers from Minnesota, Kentucky, places that wouldn’t typically be the first that come to mind when you’re talking about high-end luxury in South Florida,” said Ms. Martinez deCastro. “And instead of buying vacation homes, they’re buying true second homes, which we can assume has something to do with the pandemic.”

As in other hot markets, low interest rates and remote work policies are expected to continue bringing new buyers to the city’s luxury sector this fall. And Miami’s status as an emerging cryptocurrency capital is also expected to attract a new population of tech workers.

At the high end, luxury inventory is especially tight, and prices should continue to appreciate as a result. And in the aftermath of the Surfside condo collapse, buyers are focusing on smaller, newer properties and single-family homes, particularly those on the water.

“If you’re in the market for a waterfront home, there’s very little inventory,” said Sebastian Acosta, a broker with ONE Sotheby’s International Realty Miami. “Make sure your realtor puts you on immediate notification as soon as a property comes on the market. Come with a preapproval letter and be prepared to make an offer that same day. If it’s a good property, it’s going to fly.” 

If travel restrictions are lifted, this fall could also bring a return of investors from overseas, which could further fuel competition and price increases. 
“The market we had up until a month ago was a domestic market, but we’ve just sold to buyers from Mexico, Colombia and Venezuela, and we’re starting to see a lot of money coming in from Peru,” Mr. Acosta said. “We haven’t even seen European buyers yet, so when they do start to come back, it’s going to bring up prices for everyone.”

London 

Even amid complicated, changing restrictions on international travel and an uptick in Covid cases, luxury home sales in London have been surging in 2021. In the first half of the year, the total value of luxury sales was £2.28 billion (US3.1 billion), a 41% increase from the same time period last year. 

A stamp duty holiday and record-low interest rates helped to spur demand, which has come primarily from domestic buyers. And though the stamp duty holiday ended July 1, new inquiries remain high. 

“There was a big surge in activity through May and June, and we hit record levels of transactions in luxury country homes and London homes,” Mr. Bailey said. “And despite the fact that the tax savings are now gone, lots of domestic buyers are still registering to buy in London, with a good sprinkling of international demand.” 

Inventory is beginning to creep back up after a free fall in May of 2020, Mr. Bailey said, but the ability to lock in low interest rates should continue to drive activity in the months to come. Continued uncertainty around the pandemic is also helping to fuel ongoing interest in larger properties.

“There’s still a real impetus for people to look for bigger accommodations to facilitate working from home, and that isn’t going away at the moment,” Mr. Bailey said. “We may well see a slowing of froth in the market but we still expect it to be busy.” 

Restrictions on global travel are likely to remain in place heading into the fall, and this is reflected in the market share of foreign buyers in London. Normally, Mr. Bailey said, 40% to 45%of investors in central London are from overseas, but the percentage is currently closer to 30% to 35%. 

The diminished international demand could benefit those planning to buy in the coming months, but buyers still must work to make their offers competitive. 

“You have to try to knock out all the uncertainty you can,” Mr. Bailey said. “Cash rather than a mortgage is advantageous, and the simpler you can make your purchase, the better. It’s a great time to buy in terms of where pricing is and mortgage costs are.”

Dubai

Dubai has also shown promising signs of recovery this year from a previous pandemic lull, with luxury sales jumping by 43.8% from the first to second quarter of 2021. 

Sales of super prime homes in particular are seeing an uptick, with 22 transactions for properties priced at $10 million and up this year, the highest since 2015.

The U.A.E.’s robust response to Covid-19 allowed the nation to reopen early, drawing investors who saw Dubai as a safe haven, and today nearly 78% of residents have received at least the first shot of the Covid-19 vaccine.

“This has attracted lots of wealthy Europeans, along with high-net-worth individuals from the Middle East, Asia and the subcontinent to move to Dubai, purchasing permanent or semi-permanent residences,” said Honey Deylami, associate director of Luxhabitat Sotheby’s International Realty in Dubai.

Dubai’s policy of zero taxes on income, property, and capital gains for citizens, as well as its lack of corporate income tax, has also enticed overseas investors to make the city their permanent residence and fueled demand for prime homes, she added. Favorable interest rates also continue to draw in buyers.

And beginning this October, Expo 2020, which had been postponed last year due to the pandemic, will be held in Dubai, which is expected to drive more demand for luxury real estate in the months to come.

But oversupply could create downward pressure on pricing, and a Knight Frank report found that 83,000 new residential units are expected to come online this year. Those planning to buy this fall should look toward neighborhoods and product types where inventory is tight for better returns.

“There is still room for capital growth and healthy rental yields,” Ms. Deylami said. “The main investment recommendation is to focus on high-end properties in prime locations which are under-supplied, such as Palm Jumeirah, Emirates Hills and Dubai Hills.”