The ranks of the super-rich are swelling, but nowhere faster than in Asia. Ultra-high-net-worth individuals, classified as having a net worth of more than $30-million (U.S.) each, are snapping up properties all over the world.
Dubai, Hong Kong, London, Los Angeles, Miami, New York, Paris, San Francisco, Sydney, and Toronto were found to be the most desirable cities for the affluent home buyer last year, according to the recently released 2015 Luxury Defined report from Christie’s International Real Estate.
The average starting price for a luxury home around the globe is $2-million. Beverly Hills, where luxury begins at $8-million, has the highest price entry point.
Ultra-high-net-worth individuals are looking to diversify their portfolios into different asset groups, one of which is luxury real estate. They’re looking for a safe place to invest at a reasonable rate of return. Just as some ultra-rich buy masterpieces of art or exquisite jewels, an emerging trend in the luxury market is the “trophy home. The trophy home is becoming effectively a collectible asset class. The ultra-high end of the real estate market established new benchmarks for price in 2014, with buyers buoyed by the global economic recovery and soaring stock market prices. Five properties around the world changed hands for more than $100-million. In the same way people may buy a Picasso, those same buyers are now buying some of those trophy properties. Trophy is the new buzzword in luxury real estate.
Asia had the highest growth rate in its super-rich population last year, increasing by 3.5 per cent compared with the global average of 3.1 per cent, according to the 2015 Wealth Report by Knight Frank, an international property consultancy. Real estate is increasingly seen as a mainstream investment class, accounting for 38 per cent of an investment portfolio on average among the ultra-wealthy in Asia.
Asia’s ultra-wealthy population will surpass that of North America in the next 10 years by 11 per cent. The especially affluent in Asia hold more in total wealth than those in North America, with net assets of $5.9-trillion and $5.5-trillion respectively. The super-rich in China and Hong Kong own the most number of homes, at 4.7 and 4.6 respectively, compared with the global average of three.
Ultra-high-net-worth property investors are becoming increasingly confident and are looking to diversify their property portfolios by exploring new asset classes and locations. They invest in these key cities as they’re deemed to be safe haven and have a historical trend of good capital appreciation. And the Asian investors are flocking to the West Coast.