UHNW Consumers - New Trends In The Luxury Real Estate Market

Posted 2015-08-25 in /stories

In August 2015, surprising growth statistics emerged regarding real estate purchase trends of the elusive UHNWI (the Ultra High Net Worth Individual) demographic. Though this group’s asset base is $30M and up, their purchase behaviors have been difficult to track, because they prefer, and have others work, at keeping them anonymous. Yet, Wealth-X and Sotheby’s International Real Estate, jointly partnered on the UHNW Residential Real Estate Index, and have derived some compelling UHNWI data than infer new trends.

(Image: Stone mansion listed by Prominent Properties Sotheby's International Realty for $ 48,880,000)

The UHNW Residential Real Estate index, tracked by Wealth-X, rose to 115.2 in Q2 2015, an 8.3% rise year-on-year, and the sixth consecutive quarter in which the index has risen. This continued rise in the Index highlights a continued strength of real estate as an investment for the global ultra wealthy population, that accounts for 10 percent of all UHNW holdings, equal to nearly US $3 trillion.

79% of UHNWIs own a second home, 53% of UHNWIs own three or more homes. Many purchase in London and New York: a 42% increase has been observed in central London home prices in past five years, and in 2015, in New York, there were 114 listings priced at $30M or more, whereas in 2014, there were 73. This is about a 35% increase in just one year. 

(Image: The Villa Maria listed by Southampton Brokerage Sotheby's International Realty for $ 85,000,000)

These growth data underscore the question of why now?  Wealth-X answers that emerging market nations, namely the BRIC countries, are leading a new generation of UHNW investors to consider investing in luxury residential real estate in Western markets. In addition to the familiar reasons – safe investment potential with diversification possibilities, and lifestyle desires of being near a beach or a ski area -- there are newer ones also.   

One is the potential citizenship advantage in purchasing in different countries. Twenty countries in Europe and the Americans including the Caribbean, offer citizenship or residency programs when buying domestic residential real estate in that country. 

(Image: Penthouse in central New York City listed by Sotheby's International Realty Downtown Manhattan Brokerage for $ 70,000,000)

Another is viewing the new residence as an opportunity gateway, meaning that buying decisions are made based on what opportunities that will become available as a result of owning the home: better lifestyle, greater capital appreciation, rebalancing of liquid asset strategies, any type of ROI that could be seen as an opportunity, either in terms of lifestyle or capital asset management. 

The new Wealth-X statistics support an unmistakable escalation of interest in luxury real estate. And this escalation usually infers a parallel escalation of purchase interest for luxury products associated with significant real estate acquisition.  

 

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By Susan Kime for JamesEdition