A world of choice

Big ticket investors share a penchant for offices, retail and residential in most places except Asia where land is king.

21 January 2014, Words by Yolande Barnes

 

Large real estate deals in 2013 have been distributed across the globe in similar proportions between sectors – with the notable exception of development land. This sector is tiny in EMEA and the Americas, but completely dominates real estate markets on the Asian continent. The transfer of land ownership from the state in China plays an increasingly big part in Asian deals.

In the world of commercial and cross-border investable real estate, offices continue to dominate the large deals, with retail coming second – except in the Americas where residential apartments in purpose-built blocks designed for letting are favoured ahead of retail property. Industrial units and hotels represent small asset allocations in all jurisdictions, by value. Residences (as opposed to letting portfolios) are not included in the graph.

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In the world of private wealth, residential property forms an important component of real estate portfolios. We have identified total global residential holdings of US$5.2 trillion among UHNWIs, averaging US$15 million apiece. The total value of all these held by UHNWIs globally amounts to more than the total value of all residential property in France.

Between them, European and Asian internal investment in residential real estate makes up nearly half of the global investment of UHNWIs into residential real estate. These two regions also play the biggest roles in investing into other regions. Asia with its investment into Europe and North America, and Europe into North America and Latin America. The biggest interregional investment is from Europe into North America (US$160 billion).

Geographically, the highest levels of UHNWI residential property ownership are in regions from which individuals originated. Europe stands out as the top region for residential holdings by value with US$2.4 trillion followed closely by Asia at US$1.8 trillion. This shows UHNWIs prefer to invest in “what they know”. UHNWIs from the “old world” (North America and Europe) are much more likely to hold multiple residential properties in direct ownership than those from Africa and Asia. This is reflected in the concentrations of high-value enclaves and “billionaire boltholes” found in Europe and America, as revealed in our analysis of who buys what, where.

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Key Contacts

Yolande Barnes

Yolande Barnes

Director
World Research

Savills Margaret Street

+44 (0) 20 7409 8899

 

Paul Tostevin

Paul Tostevin

Associate Director
World Research

Savills Margaret Street

+44 (0) 20 7016 3883