According to a new report by Wealth-X and the Sotheby's International Realty released this week, ultra wealthy individuals are buying up luxury homes around the world to further diversify their holdings.
The joint report, Europe, Middle East and Africa Luxury Residential Real Estate Report For 2015, provides insight into the EMEA region's luxury residential real estate market and identifies purchasing and investment opportunities for ultra high net worth (UHNW) individuals looking to diversify their holdings.
The report shows that the UHNW Residential Real Estate index tracked by Wealth-X hit a new record high of 112.1 in the first quarter of 2015, up nearly 4 percent from the fourth quarter of 2014, and 7 percent from the first quarter of 2014. This highlights the strength of the global luxury real estate sector on the back of demand by ultra high net worth (UHNW) individuals.
The index takes into account the full range of luxury residential properties that are owned by the world's wealthiest individuals. Wealth-X data shows there are 211,275 UHNW individuals globally, who collectively own nearly US$3 trillion of real estate, equal to 10 percent of their net worth.
Wealth-X President David Friedman commented, "Wealth-X is pleased to partner with the Sotheby's International Realty brand for this second luxury real estate report for 2015. Because it touches upon several key elements in an ultra affluent individual's life, including lifestyle, investments and family, luxury residential real estate encapsulates a core part of their identity. As their wealth continues to grow, so will their investment fueled by flight to safety from less geopolitically stable geographies."
According to Philip White, president and chief executive officer, Sotheby's International Realty Affiliates LLC, this joint report was designed to provide a deeper understanding of the UHNW consumer, specifically in the EMEA region. "The research shows that trends and the economic climate in some EMEA countries are stimulating alternative investments such as real estate in these local markets," he said. "These opportunities are exciting and we are proud to be able to provide an in-depth look at them."
Key findings include:
The EMEA region offers purchasing and investment opportunities, particularly in Madrid, Dubai and Cape Town (three EMEA cities featured in the report), where luxury properties and strong lifestyle considerations may appeal to UHNW buyers.
London remains the top real estate hub for the EMEA region. The city's price per square foot (US$3,103) is nearly four times that of Dubai, six and nine times more than Madrid and Cape Town respectively.
One-third of all premium London properties for sale (homes valued above US$1 million) are worth more than US$10 million. By comparison, Dubai has only 8 percent of its luxury properties listed in the super prime range above US$10 million.
The less expensive price per square foot for premium real estate in Cape Town generally leads to larger houses. A luxury property in the South African city has six bedrooms on average - higher than Madrid and Dubai, the two other cities profiled in the report.