The world’s richest are looking to invest in luxury real estate around the world in order to diversify their assets. Where are their investments going? Which destinations are catching their attention?
To put things into perspective, there are currently 211,275 Ultra High Net Worth (UHNW) individuals worldwide, holding between them US$3 trillion in real estate around the world. This amounts to 10% of their net worth. These individuals are looking to invest more in property.
Wealth-X and Sotheby’s International Realty have once again partnered up – this time to generate the joint report Europe, Middle East and Africa Luxury Residential Real Estate Report For 2015, outlining the most prominent investment and purchasing opportunities for UHNW individuals in the EMEA region.
The report demonstrates that demand for luxury residential real estate within the EMEA region is indeed on the rise after the UHNW Real Estate Index tracked by Wealth-X reached an all-time high of 112.1 in the first quarter of 2015. This surge in demand is a major strength for the sector, having much to offer to the UHNW profile both in terms of luxury property and luxury lifestyle. The recorded increase amounted to 4% over the last quarter of 2014 and 7% over the corresponding quarter in 2014.
In considering where to make their next luxury property investment, the ultra wealthy type of buyer will definitely consider the lifestyle options that a particular destination can provide. As observed by Wealth-X president David Friedman, “luxury real estate encapsulates a core part of their identity”, including their lifestyle.
In addition, Friedman also pointed out that “As their wealth continues to grow, so will their investment fuelled by flight to safety from less geopolitically stable geographies.” As seen in the report, London remains the top real estate hub for UHNW buyers. This hardly comes across as a surprise. Being one of the world’s most prominent economic and education hubs, the city will most likely continue to attract the ultra wealthy.
However, alternative locations such as Madrid, Dubai and Cape Town are drawing attention due to their positioning and distinctive lifestyle offering. Perhaps Madrid in particular had been previously overlooked as a location of choice for the UHNW type, however, following the recent stabilisation from the economic recession and political unrest of 2014, it is looking more and more inviting.
Its favourable climate, proximity to the Mediterranean and distinctive culture are something worth considering. Dubai and Cape Town promise an equally attractive offering characterised by warm climate, vibrant city life, beautiful vistas and thriving tourism, trade and finance.
Malta’s positioning in the wider picture
This leads us to draw some preliminary conclusions with regards to the luxury property market in Malta and its luxury lifestyle offering. Over the last few years, the island’s luxury residential property market has also experienced an increase in demand. This may be attributed to several factors.
Malta may have benefited from the general increase in demand for luxury property within the European and Mediterranean region, but not simply as the result of a trickle-down effect. Although the island cannot compete in terms of size, the last few years have seen Malta greatly advance, both economically and socially, especially after the island’s resilience in the face of a global economic crisis and due to its advantageous fiscal legislation.
Coupled with its pleasant and warm climate with year-round sunshine, a unique culture and rich history as well as a stable political situation unwavered by Mediterranean unrest, it looks like Malta is an ideal candidate to attract the UHNW type.
Philip White, president and chief executive officer, Sotheby’s International Realty Affiliates LLC, highlighted that, “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.”
The recent quantitative easing announced by the European Central Bank, the positive record figures accompanying European equity markets as well as the negative interest rates stimulating alternative investments all form part of an ideal European scenario of which Malta makes part and has the opportunity to capitalise upon.
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