The world’s richest people will suffer a $10 trillion hit by 2022, Knight Frank reports

According to 17th this edition annual wealth reportReal estate consultancy Knight Frank found a traditionally mixed portfolio owned by individuals with at least $30 million in assets net of liabilities suffered its worst losses last year since in the 1930s.

By its calculations, these ultra-high-net-worth individuals—or UHNWIs—have seen a tenth of their collective wealth disappear as central banks stop flooding the economy with liquidity and start fighting back instead. of rising inflation.

In absolute terms, the staggering loss of $10.1 trillion is roughly equivalent to the annual gross domestic product of Germany, the UK, and France united.

But fear not—now is the time to be selfish, it advises.

The world’s rich will have to look through red-hot inflation numbers, tighter borrowing conditions and a cost-of-living crisis to seize opportunities as they unfold amid the economic growth this year.

“Investors should look beyond these risks,” argued Liam Bailey, global head of research at Knight Frank. “As the interest rate pivot approaches later this year, we believe market sentiment will shift quickly, and investors should be well placed to take advantage of the real opportunities emerging across real estate markets. ”

According to Knight Frank, residential real estate is currently viewed as the most desirable choice of the rich and famous when it comes to where they should best invest their money, safer than gold.

That’s in part because COVID has sparked a huge desire for mobility among the world’s wealthiest.

“The 13% of UHNWIs planning to obtain a second passport or citizenship is the tip of the iceberg,” the report found. “The development of the so-called digital nomads has only just begun.”

Dubai is the hottest destination for the world’s richest,

On average a UHNWI has two-thirds of their wealth tied up in residential and commercial property, split roughly equally between the two asset classes. On average, each of them will own 3.7 homes in 2022, up from 2.9 last year.

In comparison, they only invest a quarter of their net worth in equities and only 17% in bonds. The rest is in private equity, venture capital, art, classic cars, gold and even a small amount of crypto.

The most attractive city for the richest at the moment is the emirate of Dubai. The introduction of a new golden visa provides a pathway to longer-term residence and has contributed to residential property prices in the luxury segment rising 44% over the past year, more than any other city. in the world.

However, with the exception of some of the hottest luxury markets where the wind is now evaporating, such as Wellington and Auckland in New Zealand, UHNWIs want to live it up or at least enjoy the fruits of their wealth. more often than ever.

“The pandemic has focused people’s minds on living for now,” argued Mark Harvey, head of international sales at Knight Frank. “Markets such as Provence, Tuscany, the French Alps and Barbados are among our hotspots without stopping inquiries in 2022.”

Along with Aspen and Miami in the United States, European beach destinations have seen their property prices jump.

“Portugal has seen a huge influx of young wealth in recent years – surfers who have made money in the US tech sector for example,” said Katya Zenkovich, a partner at the private company office.

According to him, the main real estate market in Italy has changed since it extended the stay in exchange for a flat tax.

“Three or four years ago there was very little demand for penthouses in Milan,” he said. “Now they are almost impossible to find.”

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