The latest study published by Wealth-X in collaboration with Sotheby’s International Realty shows that a growing number of ultra-high net worth (UHNW) individuals view homes as “opportunity gateways.”
UHNW individuals are basing buying decisions on potential opportunities from owning these luxury residential properties.
“Special report: Homes as ‘opportunity gateways’ for the ultra wealthy” reveals two trends that are increasing the number of ultra-wealthy individuals who are buying luxury homes:
- International home-buying by UHNW individuals — those with at least $30 million in assets — from emerging nations seeking a safe investment diversification
- Home-buying as part of a program to gain citizenship or residency in foreign countries
The UHNW Luxury Residential Real Estate Index rose to 115.2 in the second quarter of 2015 — an 8.3 percent rise year-over-year, and the sixth consecutive quarter in which the index has increased.
Buying a second or third home is a popular activity among UHNW individuals — 79 percent own at least two homes, and 53 percent own three or more.
As presented in the report, key real estate markets that are ideally placed to attract UHNW individuals are cities with growing UHNW populations, such as Sydney and Vancouver. Additionally, countries offering citizenship or residency programs where there is economic and political stability are attractive for UHNW buyers.
Regional profiles: Sydney and Vancouver
Sydney is Australia’s largest and wealthiest city situated along the continent’s eastern coast. The city is home to growing markets, and it’s one of the leading financial hubs in the Pacific due to its strength in finance, manufacturing and tourism. It’s also the regional headquarters of large multi-national corporations.
On the other side of the planet, Vancouver boasts a diverse economy in terms of technology, banking and biotech, all of which have driven growth within the city.
Downtown Vancouver features several attractive luxury developments. Condominiums in West End and Coal Harbor along the waterfront near Stanley Park are highly sought-after.
Such properties have proved an attractive option. Chinese UHNW individuals seeking safe investments have been attracted by such properties, thus helping to fuel the market.
Homeownership as citizenship opportunity
Focusing on Malta, the Bahamas and São Paulo, the report outlines that greater stability, security, tax efficiency, ease of travel, higher standard of living, increased options for children’s education, along with investment opportunities that might not otherwise be available, encourage UHNW individuals to make the move.
Both Malta and the Bahamas are island nations deemed to be excellent long-term investments due to their varied and exclusive properties, stunning sea views and ideal climates that make them perfect island getaways.
Malta is home to various UNESCO World Heritage sites, including the capital city of Valletta, which is also set to be the European Capital of Culture in 2018.
With over 19 million people, São Paulo is both Brazil’s largest city and one of the world’s most populated. It is also the economic hub of a nation of over 200 million.
São Paulo is deeply cosmopolitan and always alive with energy, offering a wide range of cultural activities to UHNW buyers from any background.
The city is also attractive due to the possibility of choosing property located in different neighborhoods, each with their unique, attractive characteristics.
Other key findings
The following are other key findings from the report:
- 12 percent of second homes purchased by emerging market ultrahigh net worth (UHNW) individuals (those who reside in Brazil, Russia, India, China or South Africa) are located outside their home country.
- Fluctuations in emerging market nations are leading a new generation of UHNW investors to consider investing in luxury residential real estate in western markets.
- Chinese individuals now comprise the third-largest share of foreign UHNW homeowners in the United States — after Canada and the United Kingdom.
- Including Sydney and Vancouver, many of these target western markets have rising property values that are still three to five times less expensive than London and New York.
- In Europe and the Americas, 20 nations now offer citizenship or residency programs to individuals willing to invest in domestic residential real estate. Other countries, including St. Lucia, are considering similar policies.
- Real estate investment for many of these nation’s residency and citizenship programs begin at $250,000.
For a variety of reasons and opportunities, the ultrawealthy are purchasing luxury real estate globally.