Wealth-X and Sotheby’s is reporting that ultra-wealthy individuals are growing increasingly optimistic about global real estate opportunities. In addition to viewing these properties as a way to diversify their investment portfolio, the ultra-wealthy are increasingly interested in purchasing properties they believe offer new opportunities. For example, investors from emerging nations are frequently purchasing properties as a means of gaining citizenship or obtaining residency status in foreign countries.
Diversification Through Real Estate
When determining which properties to purchase as a part of their portfolio, today’s ultra-wealthy investors are concerned with short- and long-term investment potential as well as lifestyle fit. Furthermore, a growing number are deciding to purchase a second or even a third home. In fact, Wealth-X and Sotheby’s International Realty reported that 79 percent of ultra-high-net-worth individuals with a net worth of at least $30 million own a second home. Similarly, 53 percent of these individuals own three or more homes.
Wealth-X has further reported that that Ultra-High-Net-Worth Residential Real Estate Index is currently at 115.2 percent, representing an increase when compared to last quarter as well as an 8.3 percent year-on-year increase. The increase in the index represents the sixth consecutive quarter during which it has risen. This trend indicates that ultra-wealthy individuals are confident in real estate and, therefore, are willing to invest in luxury residential real estate.
Examining the Wealth-X Data
When crunching its figures, Wealth-X took in data related to a full range of luxury residential properties owned by the wealthiest people in the world. The research found that the 211,275 ultra-high-net-worth individuals throughout the world hold approximately $3 trillion in real estate assets. This figure accounts for 10 percent of the net worth of these individuals.
The report further found that, while the world’s wealthiest investors are still interested in purchasing domestic real estate, the interest in international real estate purchases has increased during the past quarter. This is at least partially due to the desire to achieve additional portfolio diversification. Investors are also interested in purchasing properties in markets where the property values are likely to steadily increase and where these values are not subject to the same economic forces that affect their domestic properties. As such, 12 percent of the second homes purchased by ultra-wealthy investors living in Brazil, China, India and Russia are located outside of their countries.
Looking for International Real Estate Opportunities
According to the report, ultra-wealthy Canadians represent the largest share of foreign investors who are purchasing property in the United States. Canadian investors are followed by U.K. investors and then investors from China. Sydney and Vancouver are also popular Western markets, with Sydney experiencing a 15.1 percent year-on-year increase in home values and Vancouver experience a 12.3 percent increase. Nonetheless, their property values remain three to five times less expensive than London and New York.
With 20 nations in Europe and the Americas now offering citizenship or residency programs to those who are willing to make a sizable income in the local economy, a growing number of investors are also choosing to purchase real estate in areas where they would like to take advantage of the opportunity. In most cases, the requirements involve making a real estate purchase with required investments ranging from $200,000 to $1 million. Many of the countries offering these programs offer solid long-term investment opportunities.
To learn more about luxury real estate investment opportunities, particularly those that are located in Los Angeles or Southern California, call our team of luxury real estate experts today.
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(all data current as of 11/22/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.