The 2016 Wealth Report is out and it has some interesting tid-bits of information. In this 10th anniversary issue, it looks to the past and to the future to highlight trends and takeaways that could impact personal assets from its survey of over 600 wealth managers from around the globe.
First, let’s start with the definitions:
- Millionaire = having a net worth of $1MM
- Multi-millionaire = $2MM-$10MM in net worth
- High net worth individual = $10MM-$30MM
- Ultra high net worth individual (UHNWI) = $30MM+
Without summarizing the whole report, here are some notable quotations from it, starting with a macro perspective and then getting more micro, particularly as it pertains to NYC real estate:
- “Growth is slowing and the wealthy are under increased scrutiny, yet significant opportunities remain for those who truly understand how to identify, understand and serve this group.”
- “There are now more than 13 million millionaires across the globe, up from 8.7 million in 2005; yet new data suggests the next decade will see fewer UHNWIs created.”
- “Over the past 10 years, 54% of respondents said their clients had increased their allocation to residential property. Just over 40% expected it to increase further over the next 10 years, with 30% of clients likely to consider a residential purchase in 2016. When asked what factors had been growing in importance as a reason for UHNWIs to buy residential property, the most popular (55% of respondents) was as an investment to sell in the future. Investment diversification (46%) and as a safe haven for funds (47%) also scored highly.”
- The transition to higher rates in the US is likely to be emulated by other strongly performing economies, including the UK, Australia and Canada, although expectations are being regularly pushed further out in time. The expectation of higher rates helped boost the US dollar throughout 2015, which weighed on inward investment into the US. “A slowdown in demand was inevitable, but the US still remains hugely attractive as a global market,” says Sofia Song, Head of Research at Knight Frank’s US residential partner, Douglas Elliman.
- “International capital investment has increased significantly into New York City over the past three years. It now accounts for more than 16% of all transactional activity in the US. In the past 12 months, 38% of all Manhattan real estate investment has been from international investors. UHNWI investment in New York is a significant part of that and has come predominantly from China, Singapore, Brazil, Canada and the Middle East.”
- Brooklyn is a New York City metro market that has experienced sharp increases in both supply and demand and will continue to offer opportunities to UHNWI investors over the next 10 years. It remains a market of choice among creative types due to its burgeoning communities and proximity to Manhattan. New tax legislation that makes it easier to invest in property will have a major impact.
- On the Lower East Side, new infrastructure, amenities and restaurants are driving price growth in an area burgeoning with luxury developments by developers like Ian Schrager and architects Herzog & de Meuron. Proximity to Nolita, SoHo, and the East Village is helping market product to investors.