Owning more than one house or apartment is nothing new to the “Ultra High Net Worth” population of the world. It is something they tend to do, as they typically crave comfort and privacy in cities they visit regularly. According to recent research by Wealth-X, 79% of the people in this category actually own at least two homes while approximately 53% own three or more.
The usual reasons for these property purchases include their flamboyant lifestyles, comfort and investment. But digging deeper into the subject, one would discover that these UHNW individuals are beginning to buy houses for reasons that go beyond the usual. There seem to be new motivations for buying houses, and most notable among them is the fact that these properties are seen as ‘opportunity gateways’ for the very wealthy. The decision to purchase a house is made bearing in mind that certain opportunities might become available as a result of owning it.
There are two emerging trends that are worthy of note with the UHNW individuals. First is the purchase of homes abroad by individuals from emerging countries with the aim of securing safe investment diversification. The second trend is the purchase of homes as a means of securing citizenship or residential status in foreign countries. There are also preferred locations when considering where to buy a house.
For example, market volatility in the year 2015 has led quite a number of individuals who fall into this category to buy homes in the West. Over the last decade, a number of European countries have started offering programs through which people can gain citizenship by investing a certain amount in the local economy of the country. Buying a house is often among the conditions for these programs. Research has also shown that 12% of the second houses purchases by UHWNIs are located outside of their original country.
In the second quarter of 2015, the UHNW Residential Real Estate Index rose by 2.7% when compared to the first quarter of the year. The index has continued to rise by 8.2% on a yearly basis. This shows that the confidence of UHNW individuals to invest in luxury residences has continued to grow over the years.
Chinese UHNW individuals make up a large part of the foreign home owners in the United States, only bettered by UHNW individuals from Canada and United Kingdom. UHNW individuals from the other BRIC nations (Brazil, Russia, India and China) as well as some African nations are also buying real estate in the major hubs in Europe. This is all due to the unstable markets, business considerations and political whims.
These investors buy real estate in red-hot hubs like London and New York, although they have also started setting their sights on other European cities that can offer luxury lifestyles and long term growth. Real estate prices in London have risen by 42% from 2010 to 2015. New York has also seen a dramatic rise in value with the number of listed houses also increasing yearly due to its lower prices compared to other European hubs. There is also the strong possibility of a continued rise in value of real estate in New York City.
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