Whether they are high-net-worth individuals (HNWIs) with investable assets of US$1 million+ or ultra-high-net-worth individuals with US$30 million+, the world’s wealthiest invest a significant share of their portfolio in real estate.
Real estate historically appeals to HNWIs as a tangible asset with clear lifestyle benefits. Recently, luxury property values have surged around the world. In the U.S., from Q4 2019 to Q4 2023, luxury home prices increased 65% compared to a 40% gain in the non-luxury market, according to a 2024 report by J.P. Morgan Private Bank based on data from Miller Samuel, the National Association of Realtors and Haver Analytics.
While there are generational differences in purchasing decisions between people aged 21 to 43 and those aged 44 and older, both demographics consider property a top investment opportunity, according to Bank of America’s 2024 Survey of Wealthy Americans. The difference is in the detail.
Among younger individuals, real estate represents the greatest opportunity for growth (31%), followed by cryptocurrency and other digital assets (28%), private equity (26%), a personal company or brand (24%), direct investments in companies (22%), companies focused on positive impacts (21%), bonds (17%), and U.S. stocks (14%).
Individuals 44 and older prioritise U.S. stocks (41%), followed by real estate (32%), emerging market equities (25%), international equities (18%), private equity (15%), direct investment in companies (15%), bonds (12%), and cryptocurrency and other digital assets (4%).
Understanding wealth creation patterns is essential for luxury real estate professionals. Stock market investments continue to drive significant purchases. However, for younger clients, emerging wealth sources like cryptocurrency and entrepreneurship may provide funds for future real estate. By monitoring investment channels and understanding their clients’ wealth-building preferences, agents can best serve their property needs.
Most HNWIs (86%) intend to purchase real estate in the next 12 months, according to the 2024 Wealth Report by Chubb, while one-third plan to upgrade or renovate their homes. Meanwhile, nearly half of global billionaires (43%) intend to increase their investment exposure to real estate over the next 12 months, according to the UBS Billionaire Ambitions Report 2024.
Real estate remains a key asset for wealthy individuals, whether they are looking for a second, third or fourth home—or investment property.
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