The Wealth X Global Luxury Retail Report 2015 has been released by Sotheby’s International Realty, detailing the property buying habits of the ultra wealthy.
There are 211,275 ultra high net worth (UHNW) individuals in the world, and each of them own 2.7 properties on average. Between them they hold $2.9 trillion in owner-occupied residential real estate assets. The report summarizes favored locations, property types and differing preferences of various nationalities of buyers. Luxury real estate is defined as a property worth over $1,000,000, and is generally owned by UHNW individuals.
UHNW individuals: International real estate investments
UHNW individuals are increasingly buying more properties outside of their country of birth, and the United States, United Kingdom and Switzerland are top of the table for favored locations. Buying properties has been shown to be a successful investment strategy for UHNW individuals. According to the UHNW Residential Real Estate Index there has been an 8% increase in the value of properties they own over the past 12 months.
Their success in the property market is underlined by the fact that 7% of UHNW individuals made their fortune buying and selling properties, a figure that has increased from 5% in 2013. Interestingly, female UHNW individuals hold 16% of their net worth in real estate assets, while their male counterparts place less emphasis on property holdings, holding 10% of their net worth in real estate.
The world city with the highest number of UHNW-owned residences is New York City, while Monaco is home to the highest density of foreign-owned UHNW residences, with a figure of 83%.
New major players emerging
Chinese and Russian UHNW multiple homeowners are generally younger than average, and made their money themselves rather than inheriting it. These two nationalities are increasingly playing an important role in the luxury residential real estate market around the world.
Secondary properties are usually bought for business or leisure purposes, and are on average 45% more expensive than primary residences, as well as being twice as large. The purchase of a secondary residence can also indicate a personal connection to the location, such as the children of an individual attending a nearby school.
On average, billionaires hold 4 properties worth $94 million, and demand for luxury real estate is expected to continue growing. Some invest in markets where they are trying to grow business opportunities, while certain location-specific activities such as skiing or yachting also drive demand in places such as Aspen and Monaco.