A recent report from Wealth-X and Sotheby’s International Realty claims that super-rich people are purchasing luxury homes all over the world to further diversify their holdings.
Insight into the luxury residential real estate market in the EMEA region is given in the joint report, “Europe, Middle East and Africa Luxury Residential Real Estate Report For 2015,” which also identifies opportunities for investment and buying for ultra-high net worth (UHNW) people seeking to diversify their holdings.
In the first quarter of 2015, the Wealth-X-tracked UHNW Residential Real Estate index reached a new record high of 112.1, up nearly 4% from the fourth quarter of 2014 and 7% from the first quarter of 2014. This demonstrates the resilience of the world’s luxury real estate market, driven by demand from ultra-high net worth (UHNW) individuals.
The index accounts for the full range of luxury residential properties owned by the richest people in the world. According to Wealth-X data, there are 211,275 UHNW individuals worldwide who collectively own real estate worth close to US$3 trillion, or 10% of their net worth.
President of Wealth-X David Friedman said, “The Sotheby’s International Realty brand and Wealth-X are pleased to collaborate on this second luxury real estate report for 2015. Luxury residential real estate encompasses a fundamental aspect of the identity of an ultra-wealthy person because it touches on several important aspects of their life, including lifestyle, investments, and family. Their investment will increase along with their wealth as people flee less geopolitically stable regions for safety.”
This joint report was created to give readers a better understanding of the UHNW consumer, particularly in the EMEA region, according to Philip White, president, and chief executive officer of Sotheby’s International Realty Affiliates LLC. According to research, some EMEA countries’ trends and economic conditions are encouraging alternative investments like real estate in these regional markets, he said. “These are exciting opportunities, and we’re happy to be able to give you a detailed look at them.”
Key findings include:
The EMEA region provides opportunities for investments and purchases, especially in Madrid, Dubai, and Cape Town (the three EMEA cities highlighted in the report), where opulent homes and strong lifestyle factors may appeal to UHNW buyers.
For the EMEA region, London continues to be the leading real estate hub. The cost per square foot in the city ($3,103) is nearly four times higher than in Dubai, six times higher than in Madrid, and nine times higher than in Cape Town.
Over US$1 million in homes in London that are currently for sale account for one-third of the city’s total market value. In contrast, only 8% of the luxury homes in Dubai are listed in the super prime segment above US$10 million.
Larger homes are typically the result of Cape Town’s premium real estate’s lower price per square foot. The South African city has six bedrooms on average for a luxury property, which is more than Madrid and Dubai, the other two cities profiled in the report.