Wealth Report: What are the richest people investing in this year?

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An average of 70 extremely wealthy investors were created every day last year, and this trend shows no signs of slowing down.

The global ultra-high-net-worth population has grown by 4.2%, and the number is expected to rise by 28% in the five years to 2028, according to real estate consulting firm Knight Frank.

According to their latest Wealth Report, the number of ultra-high net worth individuals or ultra-high-net-worth individuals (people with a net worth of $30 million (€27.6 million) or more) around the world rose to 626,619 from 601,300 a year earlier. increased. This is because stock investment increased in anticipation of lower interest rates, and the value of the stock market rose. The strong performance of the US economy also helped the rich get richer.

Growth was led by North America, where the number of ultra-high-net-worth individuals increased by 7.2% in one year, followed by the Middle East (6.2%).

Although Europe has lagged behind in terms of new wealth creation (the number of ultra-high net worth individuals has increased by 1.8%), “the continent continues to be home to the richest 1%,” according to Knight Frank. Global Head of Research Liam Bailey said in the report.

Latin America was the only region where the number of wealthy people decreased, by 3.6%.

The 2023 growth rate follows a year in which the wealth of the richest people recorded a staggering $10 trillion (€9.18 trillion) decline in total wealth due to a series of energy, economic and geopolitical shocks. be.

“This year has seen an increase in the number of ultra-high net worth individuals globally, driven by growth in the US and the Middle East, and we have seen continued demand for real estate from these investors,” Mr Bailey said. “The need for capital in real estate is increasing,” he wrote. The sector is higher than ever. ”

How much do I need to join the club?

Depending on what country you’re talking about, it’s generally easier to be among the richest 1% than it is to be among the ultra-rich with $30 million. Even in Monaco, the minimum net worth required is less than half.

What are the richest people investing in this year?

A total of $483 billion (443.5 billion euros) in investment awaits this year, the report suggests, with global GDP expected to rise to around 2.9% in 2024, up from 3.1% a year ago, amid a slowdown in the global economy. are doing. .

The report predicts that investments in strategic areas such as technology, energy and defense are expected to increase as the US-China relationship continues to divide.

Additionally, the report says the housing market has not been hit as hard as commercial real estate (CRE), and 2024 could be the year the real estate market recovers from the impact of last year’s high interest rates.

More than a fifth of the world’s ultra-high-net-worth individuals plan to purchase residential property in 2024.

For the world’s richest people, prime properties (the most expensive properties in a given location, generally defined as the top 5% of each market by value) are the focus. The report noted that in 2023, the value of these prime real estate properties continued to increase by 3.1% worldwide, despite high interest rates and sales volumes being hit globally.

And 2023 was a disastrous year, with almost a fifth of wealthy people considering investing in commercial real estate, even though high debt costs cut investments by almost half. .

Investors in the Middle East and Asia are expected to be most interested in buying commercial real estate, according to Knight Frank.

“Depreciation, lower interest rates and some forced sales will enable the much-anticipated improvement in investment volumes,” the report said.

AI and climate change in real estate investment

The report predicts that approximately 40% of corporate IT spending will be directed to AI-related projects by next year, and certain types of commercial real estate could benefit.

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A significant increase in demand for data centers, especially near cost-effective energy sources, is strongly anticipated. Specialist office space for research, located near universities and established technology hubs, will also be in demand.

Additionally, AI-driven building management such as energy efficiency, climate control, and security will become buzzwords in the top office market.

According to the report, sustainability is a growing focus among the world’s wealthy, with almost two-thirds of ultra-high-net-worth individuals striving to reduce their carbon footprint, making it an important consideration in CRE investments. The company is focusing on sustainability.

Climate change is increasingly affecting real estate markets, including changes in crop yields in agricultural regions, changes in tourism patterns, damage to real estate, and disruption to infrastructure.

In the short term, an increasing number of properties are facing soaring insurance premiums or are being turned down completely by insurance companies.

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On the other hand, there is a visible increase in demand from both tenants and investors for properties located in low-risk areas and for energy-efficient buildings. Demand for technology that helps property owners prepare for, adapt to, and recover from climate-related hazards and subsequent damage is expected to increase.

Luxury collectibles are now less shiny

Despite record personal sales in 2023, the report found that rare whiskey (-9%), classic cars (-6%), handbags (-4%) and furniture (-2 %).

While art, jewelry and watches are still on the rise, the report predicts this market will see significant fluctuations.

What does the next few years hold for the world’s wealthy?

“The number of wealthy people globally is expected to grow by 28.1% in the five years to 2028,” the report said, which is lower than the 44% increase experienced in the five years to 2023. added.

Growth in the next few years will be driven by Asia, overwhelmingly India and mainland China.

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More than two-thirds of the world’s richest people (the ultra-high net worth) expect their wealth to increase this year, and younger people are showing more confidence.

The proportion of women among the wealthiest people is increasing, and by 2023 they will account for around 11% of the world’s ultra-high net worth individuals. Among Gen Z (high-net-worth individuals) with a net worth of $1 million (€920,000) or more, an astonishing 81% of women expect growth in the coming years, with half expected to “Significant growth” with the potential for further increases.

Disclaimer: This information does not constitute financial advice. Always do your own research to ensure it is appropriate for your particular situation. Also remember that we are a journalist’s website and aim to provide you with the best guides, tips and advice from the experts. Any reliance you place on the information on this page is strictly at your own risk.