INTERNATIONAL. The 2012 edition of The Wealth Report, launched this week by Knight Frank and Citi Private Bank, highlights the increasing influence of global wealth flows on prime property and investment markets.
Quality of life, knowledge and influence, and economic activity are the key factors for the ultra-wealthy investing in property, says Knight Frank and Citi Private Bank’s sixth Wealth Report.
Key findings of The Wealth Report 2012 are as follows:
London, New York, Hong Kong and Paris are seen as the most important world cities for high-net-worth individuals (HNWIs).
Beijing and Shanghai are the cities with the most rapid growth in importance to HNWIs.
HNWIs from the Middle East and Africa rate Dubai as the location with the most rapid growth in importance, with HNWIs from Latin America rating Miami and Sao Paolo as strong contenders for future influence.
The report ranks Dubai as the 13th most important city in the world, and 8th in terms of growing in importance to HNWIs. “Despite its struggles in recent years, Dubai was voted the 13th most important city in the world,” the report states.
For HNWIs from the Middle East and Africa, London remains the most important city, followed by Paris, New York, Geneva and Dubai. However, in terms of fastest growing in importance, Dubai is overshadowed by only London, and is followed by Beijing, Hong Kong and New York.
“Of all the luxury market trends that have played out since the launch of The Wealth Report five years ago, it is the growth of global wealth flows that has done most to shape the leading prime markets. When asked which nationalities will become most important as prime property buyers over the next five years, Chinese, Russian, Middle Eastern, Latin American and those from other growth economies consistently top advisors’ lists,” the report says.
Personal security (63%) now ranks above economic openness (60%) in HNWIs’ choice of cities to live.
Monaco remains the most expensive residential location in the world, with one square metre there now worth US$58,300 (Q4 2011), followed by the prime locations in Cap Ferrat, London and Hong Kong.
The Wealth Report 2012 confirms the relentless shift in wealth distribution towards Asia-Pacific: the region covering China, SE Asia and Japan now has more centa-millionaires (those with over US$100 million in assets) than North America or Western Europe.
Emerging economies have continued to build their huge influence on the real estate markets in established locations: wealth flows from developing economies underpinned prices across the leading prime markets in North America and Europe including Miami, Vancouver and London in 2011.
Knight Frank and Citi Private Bank expect further growth in interest in commercial property from HNWIs, forecasting US$74.1bn of private transactions globally in 2012 (a 5% year-on-year increase).
The 2012 edition of The Wealth Report, launched today by Knight Frank and Citi Private Bank, highlights the increasing influence of global wealth flows on prime property and investment markets.
The newly wealthy from the world’s fastest-growing emerging economies rate stability, business transparency and education systems as the most important factors in a global city; prices of luxury housing in locations with this magic formula have been underpinned by their interest.
In Europe, despite the past year’s continental recession, the main luxury market hotspots have remained relatively hot – eight out of 10 top locations in the Knight Frank Prime International Residential Index (PIRI) price rankings are in the UK, France or Switzerland.
Prime property is a key part of portfolios – 2011 saw a global increase in allocation to real estate of 19%; the largest climbers in 2011 popularity for investment were bonds (+65%) and cash (+60%).
According to the report’s unique Attitudes Survey*, lifestyle and investment remain the key drivers for luxury second-home purchases, with 16% of all HNWIs surveyed already owning a ski chalet, and 40% a beachfront property. The US and UK are the top second-home destinations for the rich.
Andrew Shirley, editor of The Wealth Report comments: “This year’s Wealth Report contains even more evidence that the world’s wealthy are weathering the economic slowdown better than the wider population, and nowhere is this better reflected than in prime property markets. Those markets considered 'safe-haven' locations continue to attract private investors looking for both prime residential and commercial property. Political and economic uncertainty across the world is only helping to exacerbate the trend."
“But it is not just property where HNWIs from fast-growing economies are making their mark. The Wealth Report’s Attitudes Survey reveals that they are playing an increasingly important role in the worlds of sport, fine art, wine, and philanthropy.”
Luigi Pigorini, CEO Citi Private Bank Europe, Middle East & Africa comments: “Wealthy individuals and families, especially those originating from Europe, the Middle East, Africa and Asia, have become extraordinarily global in nature. Many seek the rule of law and stability that make the UK a top choice for investment. With English a popular second language and a relatively weak pound, the global wealthy have confidently focused their interest on London and the wealth preservation it can afford.
“Investors seeking a more conservative strategy have gravitated toward high-quality properties in central business districts in cities such as Beijing, London, Munich, New York, Paris and Sydney. Conversely, for those willing to accept more risk, high growth markets, such as Asia and Latin America, may be able to generate more attractive returns relative to the US and Europe. Investors must remain cautious as global economic growth will continue to influence all property markets, and investors should measure their yield and return expectations taking growth into account.”
The Wealth Report, produced by Knight Frank in conjunction with Citi Private Bank, offers a unique and global perspective on the world of prime property and wealth. It includes pricing data for 71 of the world’s most desirable residential locations, as well as insight from property and investment experts at Knight Frank and Citi Private Bank.
For more information, please visit http://www.thewealthreport.net
Follow The Wealth Report on @kfwealthreport.
*Results taken from The Wealth Report Attitudes Survey, which represents the thinking of almost 5,000 (U)HNWI clients of Citi Private Bank (worth on average over US$100 million each) towards a wide range of subjects, including their personal wealth, their feelings on property, both as a home and an investment, and their investment decisions.
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 242 offices, in 43 countries, across six continents. More than 7,067 professionals handle in excess of US$817 billion (£498 billion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants.
Additional information may be found at http://www.knightfrank.com | Twitter: @KFWealthReport
Citi Private Bank
Citi Private Bank advises the world’s wealthiest, most influential individuals and families and has relationships with a third of all billionaires. Its network consists of over a thousand private bankers and investment professionals across 46 countries and jurisdictions. Citi Private Bank offers clients products and services covering capital markets, managed investments, portfolio management, trust and estate planning, investment finance, banking and art, aircraft and sports advisory and finance.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
Additional information may be found at http://www.citigroup.com | Twitter: @Citi |