THE WEALTH REPORT: SEIZING OPPORTUNITIES IN THE NEW INVESTMENT ENVIRONMENT
Fresh off the press -- The Wealth Report from Douglas Elliman | Knight Frank provides an annual assessment of global prime property and investment trends. Highlighting insights on key investment risks and opportunities wealthy investors are focusing on for the year ahead.
This report provides an annual assessment of global prime property and investment trends. This monthly update provides an opportunity to share timely insight on current themes. In this edition we introduce The Wealth Report: Outlook 2023, a short research paper which examines the key investment risks and opportunities wealthy investors are focusing on for the year ahead.
We conducted in-depth conversations with industry experts and surveyed more than 500 private bankers, wealth advisors and family offices as part of our Wealth Report: Outlook 2023 survey. The study provides a unique barometer of investors' shifting views on near term risks and opportunities and suggests private capital will play an outsized role in real estate markets amid what is likely to be another turbulent year.
While inflation (cited by 67% survey respondents), interest rates (59%) and geopolitical risks (53%) continue to dominate investor concerns. Real estate (46%), tech (33%) and equity markets (28%) are cited as the leading opportunities in 2023 for wealth creation.
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Themes for 2023
Key takeaways from The Wealth Report: Outlook 2023: -
1. Global movement has been tempered by the pandemic, but the desire to be mobile is proving resilient. Some 13% of UHNWIs are planning to apply for a second passport or new citizenship, down only slightly from the 15% recorded in our 2022 report.
2. Globally, a third of total wealth is allocated to UHNWI’s primary and secondary homes, of this allocation more than a quarter is held outside their country of residence. UHNWIs in the Middle East have the highest global footprint (41%).
3. The average UHNWI owns 4.2 homes globally.
4. Higher interest rates will temper demand for residential property in 2023. Some 15% of UHNWIs are looking to purchase a residential property this year down from 21% in the previous year’s survey. Appetite is highest amongst Middle Eastern UHNWIs.
5. The US, UK and Spain are the top three locations for purchasing homes. Australia and France round out the top five.
6. UHNWIs are increasingly diverse both by geography and asset class
That said, bullish investors will have to work hard to uncover opportunities. By most measures equities remain expensive relative to underlying earnings and, with quantitative easing programs being pushed into reverse, the private sector will be expected to absorb elevated levels of bond issuance in the US, EU and the UK this year - depressing prices and raising yields.
Similarly, property values have been under pressure for several months as investors recalibrate their views on pricing in the light of higher interest rates, but there remains limited evidence of the levels of distress required to push values down to very attractive levels.
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