UHNWIs plan to increase their allocation to property

According to the results of Knight Frank’s Attitudes Survey, 28% of an UHNWI’s net worth is accounted for by their main house and any second homes, of which, on average, they own 2.4.

The survey, which was completed by almost 600 private bankers or wealth advisors representing around 23,000 UHNWI clients across the world, provides an invaluable guide to the attitudes of UHNWIs towards property, their investments and how they spend their money.

When it comes to property, just over a fifth of UHNWIs are considering buying another home this year, while 15% are thinking about permanently changing their domicile of country of residence. Quality of life was cited as the main reason for wanting to make a move and the UK is the country people were most likely to head to.

Property Investments

Almost a quarter of UHNWI investment portfolios is accounted for by property and as an asset class it is growing in popularity.

Just over 40% of survey respondents said their clients increased their allocation to property in 2013 and 47% expect it to increase further in 2014.

Residential property was the most popular area to invest in (54%), followed by commercial premises (34%) and agricultural land and forestry (12%).

Other Investments

As well as property, the survey asked how the popularity of other asset classes was changing.

Reflecting the general increase in appetite for risk among investors, equities were growing in popularity the most, with a net balance of 65% of respondents saying their clients were likely to increase their exposure to stocks and shares in 2014.

Gold and commodities were the most out of favour, with a net balance of 26% of respondents saying their clients would be reducing their exposure to them.

Luxury Spending Trends

Only 7% of respondents said their clients would be spending less on luxury goods in 2014, with 36% predicting an increase.

Investments of passion are a growing area of UHNWI spending activity, and a net balance of 44% of the survey’s respondents said their clients were becoming more interested in collecting art, with 34% reporting wine was gaining in popularity and 32% cars and watches.

Despite their investment potential, personal pleasure was still considered the main motivation by far (61% of respondents) for UHNWI collecting activity.

Download The Wealth Report 2014 for full Attitude Survey results broken down by world region.

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