The most powerful one percent of the world's population can significantly influence the global economy. This fact is well known by the company Knight Frank, which publishes an annual report on the mood of the richest people on the planet. Putting aside the trends that have already been discussed a lot, the experts have analyzed several new ones. We share the main conclusions with you.
According to Knight Frank, the richest people are those whose fortune exceeds $30 million. If you know their behavior patterns, it will be easier to predict developments in real estate, investment, and migration.
In the fall of 2020, the company conducted a survey of 600 specialists advising the richest people in the world. The questions were answered by experts working in private banking and family offices, as well as money management consultants. Their answers formed the basis of The Wealth Report – 2021. Another source of information was the premium real estate rating (PIRI), compiled by Knight Frank.
The pandemic has benefited the rich
The governments of developed countries have taken exceptional measures to support the economy. These included lower interest rates and increased fiscal stimulus. Asset prices have risen sharply, and this played into the hands of wealthy people. As a result, the number of ultrahainets over the past 12 months has increased by 2.4% and exceeded 20,000 people.
Growth was observed in North America and Europe, but the real breakthrough occurred in Asia, where the number of the rich increased by 12%. But in Latin America, Russia and the Middle East, their numbers have declined: currency fluctuations and the pandemic have weakened local economies.
While the United States has been and remains a major center of global wealth, the fastest growth in the number of rich over the next five years will be seen in Asia: their number should grow by 39% compared to the global average of 27%.
In four years, Asia will be a home to 24% of the rich, up from 17% a decade earlier. This region already has more billionaires than any other (36% of the global total). The main driver of the process is the Chinese mainland: the projected growth in the number of very rich residents here is 246% in the ten years to 2025.
Inequality will increase the risks to wealth accumulation
According to respondents, property inequality will stimulate the demand for curbing the imbalance, in particular the introduction of a luxury tax. Such measures are already being proposed by Argentina, Canada and South Korea, and they are also being discussed in Spain, the United Kingdom, and the United States.
International education is under attack
According to 84% of respondents, this year the super-rich will barely travel abroad. This trend is already evident in the declining demand for international education. However, it is expected that 11% of home purchases by Asian ultrahainets will be motivated by educational motives. Thus, it is quite likely that the number of families moving to key university centers, primarily to London, will increase.
Second passports are gaining popularity
Almost a quarter (24%) of rich people plan to get a second citizenship in 2021, which is a sharp jump in a year, by as much as 50%! A significant part of them are Americans. The origins of this phenomenon are closed borders and increased mobility: people do not care where they work from, but security and good medicine play an increasingly important role. At the same time, citizenship-by-investment programs are criticized for their lack of transparency, and the desire to appease regulators is struggling with governments' need to patch up the holes in finances that have become even bigger during the pandemic.
Check out the conditions of the programs for obtaining a second passport or residence permit
Spain
Residency Visa For Acquisition Of Real Estate (Golden visa)
Residence permitFor 2 months
from 500 000 €
Saint Lucia
Saint Lucia Citizenship by Investment Program
CitizenshipFor 3 months
from 100 000 $
Georgia
Residence permit in Georgia for real estate buyers
Residence permit
from 100 000 $
USA
L-1 Visa Intracompany Transferee Executive, Manager or Specialized Knowledge
Residence permitFor 2 months
from 5 000 $
Italy
Residence Permit in Italy for Financially Independent Individuals
Residence permitFor 2 months
from 31 000 €
Czech Republic
Czech residence permit through employment
Residence permitFor 6 months
from 1 000 €
Slovakia
Slovakia residence permit for business
Residence permitFor 3 months
from 5 000 €
Grenada
Grenada Citizenship by Investment Program
CitizenshipFor 4 months
from 150 000 $
Turkey
Residence Permit In Turkey - Real Estate
Residence permitFor 2 months
from 50 000 $
France
Passeport talent
Residence permitFor 3 months
from 30 000 €
Germany
German Residence Permit for Self-employment
Residence permitFor 12 months
from 100 000 €
Estonia
The Estonian Startup Visa
Residence permitFor 3 months
from 2 000 €
Italy
Residence Permit in Italy for Entrepreneurs
Residence permitFor 2 months
from 8 900 €
Spain
Autorización de residencia para emprendedores (REM)
Residence permitFor 15 months
from 25 560 €
Switzerland
Swiss Residence Permit for Managers
Residence permitFor 5 months
from 9 300 000 €
Austria
Red-White-Red Card for Self-employed Key Workers
Residence permitFor 4 months
from 3 000 000 €
Greece
Residence Permit in Greece by Real Estate Investment (Golden visa)
Residence permitFor 2 months
from 250 000 €
Saint Kitts and Nevis
Saint Kitts & Nevis Citizenship by Investment
CitizenshipFor 2 months
from 250 000 $
UAE
Visa by Investment in Residential Property
Residence permitFor 4 months
from 204 000 $
Antigua and Barbuda
Antigua and Barbuda Citizenship by Investment Program
CitizenshipFor 3 months
from 100 000 $
Andorra
Residence permit in Andorra for investment
Residence permitFor 3 months
from 600 000 €
Germany
German residence permit for wealthy individuals
Residence permitFor 6 months
from 60 000 €
Canada
Atlantic Immigration Pilot
Residence permitFor 6 months
from 2 000 €
Montenegro
Montenegro Сitizenship by Investment
CitizenshipFor 3 months
from 450 000 €
USA
Immigrant Investor Program - EB-5
Residence permitFor 31 months
from 900 000 $
France
Carte de sejour temporaire – Visiteur
Residence permitFor 5 months
from 15 000 €
Slovenia
Slovenia temporary residence permit for business
Residence permitFor 4 months
from 50 000 €
Malta
Malta Individual Investor Program
CitizenshipFor 15 months
from 700 000 €
United Kingdom
UK Investor visa Tier 1
Residence permitFor 2 months
from 2 220 000 €
Egypt
Egypt Citizenship by Investment
CitizenshipFor 6 months
from 250 000 $
USA
Treaty Investor Visa E-2
Residence permitFor 4 months
from 100 000 $
Turkey
Turkey Citizenship by Investment - Real Estate
CitizenshipFor 3 months
from 400 000 $
Italy
Investor Visa for Italy
Residence permitFor 3 months
from 250 000 €
Bulgaria
Residence for Pensioners in Bulgaria
Residence permitFor 4 months
from 2 870 €
Spain
Residence Permit in Spain by Investment (Golden visa)
Residence permitFor 2 months
from 1 000 000 €
Montenegro
Montenegro Residence Permit by Property Purchase
Residence permitFor 2 months
from 30 000 €
Portugal
Portugal Residence Permit for Passive Income Earners
Residence permitFor 6 months
from 8 460 €
USA
O-1 Visa for Individuals with Extraordinary Ability or Achievement
Residence permitFor 3 months
from 5 000 $
Vanuatu
Vanuatu Citizenship by Investment Program
CitizenshipFor 1 month
from 130 000 $
Greece
Greece Residence Permit for Financially Independent Persons (FIP)
Residence permitFor 4 months
from 24 000 €
UAE
Long-term residence visas in the UAE
Residence permitFor 1 month
from 1 350 000 $
Paraguay
Paraguayan Temporary Residency
Residence permitFor 2 months
from 3 000 €
Bulgaria
Bulgarian Investment Immigration Program
CitizenshipFor 24 months
from 512 000 €
Dominica
Dominica Citizenship by Investment
CitizenshipFor 2 months
from 100 000 $
Spain
Spain Residence Permit - Residencia no lucrativa
Residence permitFor 6 months
from 28 800 €
Latvia
Residence by Property Investment Program
Residence permitFor 2 months
from 262 500 €
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Housing prices are rising because of the pandemic, not in spite of it
An assessment of the world's leading luxury housing markets confirms that average price growth has accelerated over the past 12 months. Auckland leads the way with an 18% increase due to New Zealand's sustained struggle with Covid-19. However, growth is seen even in those markets that have been hit hard by the pandemic. This is facilitated by low mortgage rates, as well as the demand for more living space and privacy, combined with a decrease in the number of trips to work.
The housing boom caused by the pandemic continues
According to the survey, 26% of the richest plan to buy a house in 2021, with the main motive being the desire to update the main place of residence. There is a marked increase in demand for rural and coastal real estate, with access to open space coming to the fore.
The pandemic is spurring demand for locations where you can improve your health: mountains, lakes, coastal resorts. This will fuel price increases in key markets.
One of the factors of the growing demand for rural real estate was its relatively low price and growth prospects.
What is important for rich people in terms of finding a new home?
Availability of open space
Office inside the house or nearby
Transport accessibility
Recreational opportunities in the home or nearby
Access to quality medical care
Internet connection
Air quality
Private investments in real estate will grow
Although total real estate investment declined in 2020, private investors invested 9% above the 10-year average, while the amount allocated by institutional investors fell by 6%.
This trend will continue in 2021, with a quarter of the super-rich planning to make an investment this year. In addition to the land for development, the key requests will be investments in residential real estate and logistics.
Pandemic spurs real estate innovations
The rapid growth in the market value of companies such as Amazon and Zoom has confirmed the investment attractiveness of technologies. Knight Frank experts believe that the market for data centers and research real estate (in the fields of medicine, pharmaceuticals, and biotechnology) will grow in demand. This request may be one of the drivers of changes in the office sector, which requires new solutions after the spread of remote work.
In addition, the super-rich have begun to focus on investing in the environment, social services, and management (ESG). In 12 months, the number of investors interested in this topic has increased by 43%. Obviously, they are based on the potential growth in demand for green and energy-efficient buildings.
What does this mean for everyone else?
Understanding the mindset of the richest part of society can also be useful for those who do not have tens of millions of dollars in stock. For example, you can pay attention to the priorities in the formation of the investment portfolio: housing for rent is still in the lead, offices have not lost much ground, while interest in logistics facilities and land for construction has significantly increased.
On the other hand, in the world of the rich, as well as among other buyers, the demand for suburban real estate is increasing. As a result, it can be assumed that in the coming years it will grow in price, which means that this is a promising area for investment.
