Business, education, lifestyle and industry are just a few of the key factors influencing where the world’s Ultra High Net Worth (UHNW) individuals are choosing to invest. And whether it’s an inner city penthouse or a sprawling country estate, the United States clearly dominates the Top Ten.
1. New York, a luxury market on the rise
It’s the city that never sleeps, the home of musical theatre and not to mention the birthplace of one of my favourite cocktails. Some might say, New York has it all. As well as having huge lifestyle and entertainment benefits, it also happens to be one of the biggest financial hubs in the world and the top pick for UHNW individuals.
New York’s investor confidence continues to be fueled by a healthy combination of wealthy foreigners, a steady influx of Chinese property buyers and historically low interest rates. Whilst the most expensive real estate transaction ever recorded in Manhattan was a luxury penthouse that sold for an astonishing $71.3 million, there are plenty of more affordable options in this, what is considered by many, long term investment market.
2. London, remains in high demand
London captured my heart long ago and it never fails to impress with its stunning mix of traditional mews houses, modern luxury apartments and sprawling suburban mansions. Throw in a few famous landmarks, a rich history, and of course a solid financial market, and London is undoubtedly one of the most important cities in the world for luxury real estate.
2014 started with mixed market signals with fears of a housing bubble leading to a decline in transactions. There were also some short term challenges stemming from high value property taxation being on the political agenda for the upcoming 2015 General Elections.
However despite the fears and speculations, there's no stopping the UHNW individuals who continue to seek residential real estate opportunities in the city and luxury property remains in high demand. If you needed any more convincing the recent sale of a Mayfair penthouse for a whopping US$40 million should do the trick.
3. Hong Kong, the financial hub of Asia
An enigmatic city of skyscrapers, ancient traditions, vibrant culture and heavenly food, Hong Kong is not only fascinating and appealing to the tourist, but it is also a destination of choice for luxury real estate investment.
Appeals include a good education system, a very diverse and ever increasing population and of course the fact that Hong Kong is the financial hub of Asia. Combining all these elements in terms of real estate and the result is a high and relatively stable price per square foot for luxury residences.
Trophy homes are the order of the day, demand is very much there and sellers continue to offer high priced properties. A Hong Kong penthouse was recently listed for an outrageous US$105 million, making it the most expensive property per square foot in the world.
4. Los Angeles, the prominence of Hollywood
The Walk of Fame, Hollywood sign, Santa Monica, Venice Beach, Malibu…… Los Angeles is one of those places with an incredibly familiar feel even to those who have never been. Although attractive to many types of UHNW individuals, it comes as little surprise to learn that Los Angeles is most sought after by those involved in the media, sports, and entertainment industries.
In terms of where UHNW individuals prefer to invest and reside, it’s a mix of the slightly more remote areas of Malibu and Santa Barbara and the traditional celebrity hot spots of Beverley Hills and Bel-Air. Unlike New York and Hong Kong, it is oversized houses rather than swanky penthouses which are the most sought after property type.
Demand is high which brings with it the inevitable result of incredibly high prices. So far for 2015, the highest priced property sold in LA carried a price tag of US$102 million.
5. San Francisco, boosting investors confidence
With 43 hills to be found on this seven by seven mile peninsula, you might find your own head is in the clouds but that certainly isn't the case for the savvy investor. Confidence in the San Francisco market is high and with a continuous upward trend in property prices, it's looking likely to remain so.
Luxury real estate in San Francisco is on the up and it’s largely thanks to the Bay Area’s strong economy which has allowed affluent individuals to profit from appreciation in stocks. Foreign buyers in the area are also on the increase which only helps to fuel the demand.
San Francisco holds a very different appeal to that of Los Angeles and it’s one that certainly attracts a younger UHNW individual. Current demand for luxury real estate far outstrips supply so new inventory is under construction with deliveries beginning in 2016. Big things are happening in San Fransisco.
6. Washington DC, the centre of wealth and politics
In a game of Top Trumps between Washington D.C. and New York, the latter would win the points for arts and museums, but when it comes to the price of luxury real estate, Washington D.C. holds all the right cards.
Washington D.C offers something rare and somewhat unique as although it is one of the biggest cities in the United States, it manages to offer the kind of lifestyle more commonly found in smaller towns.
Property prices for luxury residential homes in Washington D.C, whilst still reaching above US$10 million, are much less expensive than New York which is understandably a huge appeal particularly amongst domestic UHNW individuals.
7. Singapore, reinventing itself to the world
Smokey temples with skyscraper backdrops, luxurious condos backing onto pure nature and old-school shophouses housing secret cocktail bars, Singapore is reinventing itself and certainly giving Hong Kong a run for its money in the financial hub stakes.
Recent regulations and cutbacks in housing allowance have resulted in fewer foreign UHNW individuals being granted permanent residency in Singapore and this has resulted in a somewhat disappointing performance of the luxury residential real estate market.
The good news however, is that a return to growth over the next year is likely with the expected re-election of the PAP in the upcoming elections. Furthermore, interest rates are low, politics stable, education good and the social and economic climate is favourable. All reasons that make Singapore a very attractive luxury real estate market.
8. Dallas, low cost high standard living
Famous for cowboys, cheerleaders, that TV show and for having more malls per capita than anywhere else in the US, this is one seriously fast growing city with a rich past and present. It just so happens that the future isn’t looking too shabby either.
The relatively lower cost and high standard of living in very family friendly surroundings have secured Dallas’ place on the UHNW radar. As an added bonus, Dallas is 9th in world investment according to Cushman & Wakefield’s new growth cities report and overall, house prices went up 7% in 2014.
The majority of UHNW individuals attracted to Dallas come from the oil industry and although some hail from Canada, it remains primarily an American city, at least for now. But as Dallas continues to grow, so will the demand for luxury real estate which will inevitably open the international market up.
9. Mumbai, further investment on the horizon
Mumbai is a city of extremes, from dreamers to hard labourers, fishermen to millionaires and from large slums to expensive homes. It’s India’s financial powerhouse, fashion epi centre and has a very prolific film industry.
Considered as a risky investment by non-Indians, Mumbai is primarily a hub for locally based UHNW individuals as well as the large, non-resident population and there are some 5,000 UHNW individuals of Indian descent living outside of India.
Mumbai has many investment appeals and it has recently confirmed construction of the tallest residential tower in the world, a symbolic announcement of its arrival on the global stage. Space is also issue in Mumbai so prices are expected to be driven upwards as that becomes a more critical issue.
10. Paris, remains in high demand
The City of Light, or Love if you prefer, is home to some of the world’s most recognisable architectural icons, exquisite cuisine, chic boutiques, priceless art and of course, everyone's favourite dance; the can-can. It’s of little surprise that Paris continues to be one of the world’s most sought after destinations for international buyers.
In real estate terms, there’s been some decrease in property prices in the French capital as a direct effect of governmental austerity measures and a slow recovery from a global recession.
Furthermore, wealthy French residents are fleeing to avoid increased taxation which led to an increase in the supply of luxury homes and a decrease in price. That being said, Paris offers greater affordability than other major cities such as London, Hong Kong and New York which means it is still attracting both domestic and international UHNW individuals.
International Luxury Residential Real Estate
As more and more UHNW individuals relocate in line with business opportunities or development, the demand for luxury residential real estate continues to be stimulated.
Location pinpointing within a particular area or region is not only influenced by business considerations but also the level of local education, where UHNW individuals need to consider the needs of the children, ease of travel or investing in a vacation home, tax regulation and institutional infrastructure. Not forgetting of course, the cocktails.
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