Study shows: the Super rich primarily invest in real estate
Rich, richer, ultra-rich – the increase is not quite accurate, yet this is what the rich who have at least 30 million dollars’ worth of investable assets are called – the so-called ultra-high-net-worth individuals or UHNWI for short. The Wealth Report 2016 by Knight Frank has investigated how this group of rich people invests their assets. Since the group of super-rich seldom speak publicly about their investments, the Wealth Report surveyed 400 asset managers and bankers of the super-rich and evaluated their answers. The insights gained can also be useful for smaller investors in order to invest in the right asset classes, for example. The most important results of the study have therefore been summarized for you below.
Real estate – golden brick and mortar
The report shows that the super-rich hold almost 35% of their assets in real estate. Of these, 31% are commercial real estate and 69% are residential real estate.
Asset managers have seen an increasing interest from the super wealthy for commercial real estate as an investment class. 47% of asset managers said that commercial real estate will become more interesting to their customers in the next 10 years and that more will be investing in this type of real estate investment class. Office buildings and hotels are currently among the most popular commercial properties. Interestingly however, is that logistics and warehouse buildings are becoming increasingly popular. Asset managers have indicated that shopping centres and retail outlets could soon be replaced by the logistics and storage facilities as the second most popular investment opportunity.
Seeing as commercial real estate represents only a third of all real estate investments, it can clearly be seen that the super wealthy appreciate the advantages of residential real estate properties.
Germany as interesting investment market
The Wealth Report 2016 gives further interesting insights into the investment behaviour of the super-rich and gives an overview of emerging markets and investment opportunities.
Among other things, Germany is described as one of the most interesting residential property markets, alongside Vietnam and the USA. Germany, the strongest economic power in Europe, has seen a 23% increase in residential property prices in the last 5 years having made it become one of the most popular markets. Especially Munich and Berlin are particularly popular and promise good returns. Although the major cities are increasingly being built up, demand cannot be met leading to a continued rise in prices.
Looking into the future
Real estate as an asset class is the future for the super-rich. 55% said that real estate will become even more interesting in the next 10 years and investment will continue to increase.
Conclusion
The super-rich invest considerable sums of their assets in real estate and will be investing a lot more in this asset class in the coming years. Investing in real estate used to be more difficult for smaller investors with less assets in the past. Particularly real estate holdings via open or closed funds were on average not very successful. And fees were so high that often lean returns were thus further curtailed. However, thanks to real estate crowdfunding, investors can now invest in attractive real estate projects like the super-rich. At iFunded, you can currently invest in the CALVIN BERLIN residential property and secure an attractive interest rate of 5%.
What is your opinion on the investment strategy of the super wealthy? We welcome all your comments.