It’s All About The Money

When you think of the super-rich, what springs to mind? Huge houses, supercars, private jets, the asset classes they are investing in?

Perhaps, but where do they all live?

In Knight Frank’s 2019 Wealth Report, all is revealed. Of the Ultra High Net Worth Individuals worth at least $30 million (£22.6 million), around half are concentrated into just ten cities and it may come as a surprise that London sits at the top of the list (and Forbes claim London will remain the world’s #1 piece of real estate in the next 10 years):

London – 4,944 UHNWI worth at least $30m
Tokyo – 3,792
Singapore – 3,598
New York – 3,378
Beijing – 1,673
Paris – 1,667
Seoul – 1,594
Taipei – 1,519
Zurich – 1,507
Sao Paulo – 1,352

So what draws the very, very rich to these cities in particular?

Again, it will come as no shock that the world’s biggest metropolises house the super-wealthy since these are the cities that offer the most. The greatest business opportunities, the most exciting lifestyles, the best medical care, the most convenient transportation and the safest neighbourhoods surrounded by those of a similar ilk and according to Liam Bailey, Knight Frank’s global head of residential research, ‘London has a very unique proposition. There’s no other city that compares as a global hub for so many different sectors.’

Over half of the FTSE100 companies and more than 20% of Europe’s 500 biggest companies have their headquarters in London and three-quarters of American Fortune 500 companies have offices here.

Despite the uncertainty of Brexit and the growing criticism from some that foreign property investors are driving up prices, London remains the place to be.

However, It’s Not All Sweetness and Light…

Judith Evans reporting in the Financial Times suggests that ‘transactions of high-end homes in central London last year reached a decade low, in a market already damped by stamp duty changes.’

The wonderfully-named Roarie Scarisbrick, a buying agent at Property Vision said that high-end buyers had been largely ‘reduced to a residue of people who need to buy’ but who were securing ‘some good discounts.’

No-one more so than Ken Griffin, founder of US hedge fund Citadel who recently spent £95 million on a Grade II* listed mansion at 3 Carlton Gardens overlooking The Mall and St James’s Park and within eyeline of Buckingham Palace. It was the most expensive home sold in the UK since 2011 but it had been on the market for £125 million for two years. A decent discount in anyone’s book.

However, as we (and everyone else) keeps saying, people are keeping their powder dry until the Brexit shambles is resolved one way or another and it’s even been mooted that home ownership decisions may be influenced by political views.

Where Are The Rich Putting Their Money?

With the uncertainties surrounding geopolitics, more and more money is being re-routed from traditional asset classes like stocks and shares and being diverted to art, classic cars, whisky and the like.

Last August, a 1962 Ferrari 250 GTO was sold for $48.4 million by Greg Whitten, one of the early Microsoft employees to an unnamed multimillionaire and in November, Joe Lewis, the Bahamas-based billionaire and owner of Tottenham Hotspur sold Portrait of an Artist (Pool with Two Figures) by David Hockney for $90.3 million, again to an unnamed individual. The market for ‘luxury investments’ has surged dramatically in the past decade:

The 10-Year Value Change

Rare Whisky – up 582%
Cars – up 258%
Coins – up 193%
Stamps – up 189%
Watches – up 173%
Art – up 158%
Wine – up 147%
Jewellery – up 112%
Coloured Diamonds – up 102%

Whisky is now such an in-demand asset class that China’s Hunan Airlines are now running direct flights between Beijing and Edinburgh, a route that would have been unthinkable a decade ago and Liam Bailey says that ‘There’s still a desire for wealthy individuals to dedicate part of their portfolios to tangible items.’

A wise old sage once told us that ‘you’ll never lose money in the long term if you put it into bricks and mortar’ and as a property company, we can’t disagree but nowadays, it’s not just bricks and mortar, it’s Bugattis and Mercs, Bordeaux and Merlot and Breitlings and Mont Blancs.

As always, if you have a property enquiry we can help you with, contact us today on 020 7629 1088 or info@bdgsp.co.uk.