Ultra High Net-Worth Individuals (UHNWIs) are increasingly investing their money into commercial property, such as hotels and office blocks as a safe place to put their money, according to research carried out by Real Capital Analytics on behalf of the Reuters news agency. This appears to reflect renewed confidence following the global economic crash of 2008.
The research shows that over the course of 2013 and across the globe UHNWIs spent $11.2bn on hotels, offices, warehouses and shops. This was more than 50% up on the $7bn spent on commercial property in 2012 and three times as much as was spent in 2008 after the crash.
Further research just published, by UK-based property consultants Knight Frank, suggests that the combined fortunes of the world’s wealthiest people reached a combined total of $20.1 trillion in 2013, up from $19.5 trillion in 2012. Knight Frank even go so far as to put an exact figure on the number of UHNWIs: 167,669. They use the benchmark to define a UHNWI as someone who has $30m or more in net assets, excluding their principal residence.
According to Knight Frank, the majority of high net worth investors come from Asia or the Middle East. Many of them have made their fortunes in businesses such as manufacturing; they already own residential properties in major cities such as London and Hong Kong, and the move into commercial property is a logical step for them. Although some consider such investments risky, hotels and offices seem to offer higher returns than more traditional investments such as gold or bonds.
Jeremy Waters, Head of International Investment at Knight Frank, said that their research had revealed that clients were looking for property deals in London in the £100m bracket ($167m), which offer yields of between 3.5-6.5%. He added that in Europe, France, Germany and Spain as well as the UK are popular places to buy commercial property.
According to the Real Capital Analytics’ research, the single biggest UHNWI deal last year was the $1.36bn purchase of a stake in the General Motors’ tower in New York by the family trust of Zhang Xin, Chief Executive of office landlord Soho China, and Brazil’s Safra family.
