Art rated as the top-performing asset, rising by 21 per cent to overtake wine and classic cars. Owning sports team was another trend
While there was continued growth in global wealth and allocations to real estate, the year 2017 also saw the ultra rich (above USD 5 million) investing in equities, cash, private equity, bonds, gold, cryptocurrency, not to mention art, wine and even sports teams, according to The Wealth Report by Knight Frank.
As many as 62 percent of the global rich invested in equities, 56 percent in property, 46 percent in cash, 45 percent private equity, 30 percent in bonds, 25 per in gold, 21 percent in cryptocurrency and 38 percent in alternative assets.
Art was the top-performing asset in the Knight Frank Luxury Investment Index during 2017, rising by 21 percent to overtake recent front-runners wine and classic cars. Besides investing in real estate, investors also put in money on sports teams, the report said.
For the record, North America remains the world’s largest wealth region. Some 34 percent of the world’s ultra-wealthy are based there, and their ranks rose by a further 5 percent last year, taking the total to 44,000.
Europe, however, failed to fend off a strong Asian challenge, narrowly losing its second place spot despite a 10 per cent rise in the number of people with USD 50 million or more in net assets that took the total population to 35,180. A 15 percent rise in Asia’s ultra-wealthy cadre took its population to 35,880.
In China, the ultra-wealthy population will more than double in the next five years, according to Wealth-X. There will also be strong growth in Japan (+51 percent), India (+71 percent), Indonesia (+66 percent) and Malaysia (+65 percent), as per the Knight Frank Wealth Report.
Real estate: Investors, both private and institutional, continue to see real estate as an attractive part of their overall investment portfolios. The benefits include a stable income return, the potential for capital value growth, diversification and, in particular, its status as a relatively high-yielding asset class in a world that is on the hunt for returns.
Commercial real estate remained a favoured asset class for global investors during 2017, with transaction volumes robust at USD 840 billion and above-average returns recorded across many sectors and markets, the report said.
Sports teams: Ultra-wealthy investment into sports teams is a growing phenomenon. According to the latest Billionaires Insights report from bank UBS, over a 140 of the world’s top sports teams are owned by just 109 billionaires. The majority – 60 – are from the US, but 29 come from Asia, and Asian billionaires were behind over half of club acquisitions in the past two years, the Wealth Report said.
Art: After a depressed art market in 2016 caused widespread concern, consignors were tempted back by auctioneers last year. The desire among wealthy art enthusiasts to add to their new museums carried on through 2017, while the appetites of great institutions such as the Louvre, which opened a new franchise in Abu Dhabi, put more pressure on supply, the report said.
Wine: Much of the increase in demand for wine came from Asia. This was partly due to devaluation of sterling against other currencies and partly due to sophistication and ever increasing depth of knowledge in these markets.
Classic cars: Continue to remain the best performing asset class. A 1956 Aston Martin DBR1, raced by legendary driver Stirling Moss, was the year’s top seller when it was auctioned by RM Sotheby’s for USD 22.5 million.
Jewellery and ceramics: Chinese luxury investments and buyers were firmly among the record-breaking action in 2017. Hong Kong jeweller Chow Tai Fook paid a record price for a piece of jewellery, snapping up the Pink Star, a 59.6-carat vivid pink diamond, for HKD 553 million (USD 71 million), while a strikingly small and simple 1,000-year-old Ru guanyo ceramic brush-washing bowl doubled its pre-sale estimate by fetching HKD 295 million (almost USD 40 million).
Furniture: Bonhams sold an exceptionally rare set of four 16th- or 17th-century Chinese huanghuali folding chairs, estimated at around £200,000, to an Asian buyer for almost £5.3 million.
Luxury homes and art: Art was not the only luxury collectible around which UHNWIs are building their homes. UHNWIs regularly ask to purchase pieces along with the property that houses them.
Private jets and yachts: Sales of new private jets remained relatively flat but a turning point could have been reached in 2017 with growth in private flight activity, in particular charter flights – up 10 percent in Europe. The super yacht market is also recording growth, driven by the US, says the report.
