For most of UHNWIs, residential property has become the prime item of spending. Property is not only a place to live; it has evidently become a tremendously popular place to invest, William Wesnofske reports.
The world’s largest wealth survey produced by Private Banker International’s sister company WealthInsight in partnership with global real estate services consultancy Knight Frank revealed that 24% of UHNWI’s investment portfolios are accounted by property.
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Regarding commercial property investments, overall UHNWI interest is focused strongest on office space, totalling 33% of investments. Office space is followed by 24% for retail space and 21% for hotels. Of course this varies among regions, as for example the rise in demand for student accommodations in the UK has caused this to be a bigger focus in this particular region.
The interest in secondary property for investors can somewhat be explained by the new found desire for risk. Former US presidential advisor Pippa Malmgren recently said the UK has emerged as the world’s most attractive residence for non-domiciles, which is reflected in the rise of property prices.
The big question for the continuing globalisation of UHNWIs demand for private property in 2014 will come down to what the tapering of quantitative easing will bring, she said.
Many prime property markets have benefited directly from the global stimulus over the past few years. As asset buying plans phase out and interest rates rise once again, asset prices will ultimately come under pressure.
The report revealed that commercial property investors are now returning to previously unfavoured markets and second tier cities. According to Real Capital Analytics, global investment in commercial property rose 17% to $533 billion in 2013. Knight Frank forecasts this number to increase by 11% in both 2014 and 2015.
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By GlobalDataThe attitudes survey also confirms the rising popularity in commercial property among UHNWI investors, with over 40% of respondents saying their clients had increased their allocation to commercial property in 2013, with 47% expecting a further increase in 2014.
| 2011 | 2012 | 2013 | 2014 (forecast) | 2015 (forecast) |
|---|---|---|---|---|
| 447.79 | 451.99 | 532.85 | 593.50 | 656.90 |
Singapore the jewel of Asia
The report predicts that Singapore is poised to surpass Tokyo as the Asian city with the most UHNWIs within a decade. Singapore’s stature as a financial centre increases with the region’s growth: it’ll have 4,878 people with $30 million or more in assets excluding their principal residence by 2023, a 55% gain from last year, and only behind London globally.
Almost a quarter of Asia’s UHNWIs are considering buying another home in the next 12 months, with Singapore following the UK as the top location for second-home ownership.
On the other hand, London is expected to have 4,940 UNWIs by 2023, while New York will take the number 3 spot with 3,825, according to Knight Frank.
Indian billionaires’ escalation
More Indians will buy the world’s most expensive homes as the number of billionaires here multiplies faster than in any other country, surpassing the number of billionaires in the UK, Knight Frank predicts.
The number of billionaires in India is in fact estimated to be growing at nearly 100% by 2023, surpassing China’s 80%, Russia and Brazil’s 40%.
In 2003, the number of billionaires in India stood at 23, and in 2013, it touched 60. It is expected to climb to 119 in 2023. India will be ranked fourth in terms of the number of billionaires in the next ten years from the current 6th position.
Driven By Desire
As the new found desire for risk represents the departure from prime to secondary property, it also displays the attitudes of UHNWIs, and their enduring appeal of luxury property. While wealth increases worldwide (the number of UHNWIs rose by 59% since 2003), so does the spending on luxury goods and collectibles. As WealthInsight reports, Rolls Royce sales are up 17% in the Middle East, and 11% in China. Over 60% of attitudes survey respondents said pleasure was their clients’ main motive for spending on items of this sort.
