The policy decisions shaping global wealth migration

Last week I touched on new Knight Frank figures showing a sizeable slowdown in global super-prime (US$10m+) activity. The numbers looked dramatic: volumes fell by a fifth in Q3 compared to the previous quarter. The total value of sales dropped by 29%.

But super-prime markets do not behave like the mainstream. They are thinner, more volatile – and they move with global wealth creation rather than domestic wage growth. Even with the Q3 slowdown, activity remains well above pre-pandemic norms. More importantly, the cooling is uneven. Some cities are clearly in consolidation mode; others are still firmly in expansion.

That said, we can't ignore some of the forces at play in London and New York, two of the world's largest super-prime markets. Zohran Mamdani's decisive win in the New York City mayoral election, for example, led many to question whether wealthy New Yorkers will opt to move elsewhere. There are clear parallels with London, where several high profile wealthy individuals have announced relocations in recent weeks. 

A blip?

The wealthy are becoming more mobile – a theme we've explored in repeated editions of The Wealth Report . During the pandemic, outflows to Miami were substantial; a net 30,000 New Yorkers fled the city for Florida’s Palm Beach and Miami-Dade counties in the five years through 2022, taking with them a combined $9.2 billion in income, according to a non-Partisan Citizens Budget Commission report covered by Bloomberg.

Could we see a repeat? I spoke to Jonathan Miller, President and CEO of NYC-based Miller Samuel for a new edition of our Intelligence Talks podcast. His on-the-ground read broadly aligns with my view. While New York sales may have dipped in Q3 the outlook remains strong. As he put it to me: “Wall Street looks set to surpass last year’s compensation levels, which were already among the highest on record.” And on the Q3 pullback specifically: “I do think it’s a blip. We often see the very high end outperform the rest of the market in the fourth quarter.”

If New York is a case study in financial-market-driven resilience, London is the mirror image: a reminder of how quickly policy uncertainty can sap momentum at the top end. Our Q3 figures show 36 sales above $10 million in London, down from 52 in the previous quarter and 62 a year earlier. Go back to 2022 and London was the world’s second-busiest super-prime market; it now sits in sixth place.

Policy risk

What has changed is not the city’s global appeal, that remains intact, but the perceived stability of the tax environment for globally mobile wealth. Threatened wealth taxes, changes to the treatment of non-domiciled residents, and a steady drumbeat of anti-wealth rhetoric have all combined to encourage a “wait and see” mindset among high-value buyers.

For New York’s policymakers – where over half of city tax revenues are tied to real estate – London’s experience is likely to be read as a warning, not a blueprint.

So where does this leave us? Q3 marks a cooling, not a collapse. Globally volumes are down from exceptional recent highs but still remain elevated by historical standards. New York is well placed. Stable inventory, strong financial-sector compensation and a relatively pragmatic policy backdrop give it a credible claim to lead any next upswing.

Policy risk is the key differentiator. Markets that are seen to welcome capital – rather than merely tax it – will be the ones that gain share in the super-prime league table.

A patchwork

I'm writing this hours before Chancellor Rachel Reeves is almost certain to introduce an annual mansion tax on homes worth at least £2 million. If there was any doubt as to whether this will distort behaviour and cause unintended consequences, The Times has some fun outlining how homeowners might devalue their home to avoid it. 

Rachel Reeves will have finished what George Osborne started. The UK will have the perfect range of property taxes to penalise anyone trying to secure a home that meets their needs. If you move, you pay stamp duty; if you stay and extend your property to gain that extra bedroom, you may face a mansion tax simply because your investment and your hard work have added too much value to your home.

Bloomberg's John Stepek has a good piece this morning on how many wealth taxes the UK already has. Property has always been the target of heavy treatment; you pay stamp duty upon purchase, council tax during ownership, capital gains tax if it isn't your main residence and there may be inheritance tax when you die, depending on circumstances.

These kinds of bloated, complicated levies are replicated to a greater or lesser degree throughout the economy. Organisations like the Institute for Fiscal Studies have repeatedly called for the Chancellor to create "a fairer, simpler, more growth-friendly tax system," because the existing one is so complex and stuffed with perverse incentives. Layering another tax onto the patchwork that already exists is reflective of a government running low on ambition and ideas

In other news...

Robert De Niro: ‘the sky’s the limit’ for Nobu residences (FT).