Many ultra-wealthy individuals who buy second or third homes are motivated by lifestyle fit and short- and long-term investment potential.
But a new study finds that a growing number of these buyers see homes as opportunity gateways, and base their buying decisions on the opportunities they expect to become available as a result of owning the home.
Wealthy buyers from emerging nations are looking for safe investment diversification, and others invest as part of a program to gain citizenship or residency status in foreign countries.
Wealth-X and Sotheby’s International Realty reported Wednesday that 79% of ultra-high-net-worth individuals, those with at least $30 million in assets, own at least two homes, and 53% own three or more.
Wealth-X said the UHNW Residential Real Estate index, which it tracks, rose to 115.2 in the second quarter, an 8.3% year-on-year increase, and the sixth consecutive quarter in which the index has risen.
The index’s continued rise reflected the confidence of ultra-wealthy individuals to invest in luxury residential real estate, according to the report.
The index, Wealth-X said, took into account the full range of luxury residential properties owned by the world’s wealthiest individuals. Its data showed that 211,275 ultra-high-net-worth individuals globally collectively hold some $3 trillion in real estate assets, equal to 10% of their net worth.
The report identified two emerging trends among wealthy real estate investors. Although most investors buy a home domestically, interest in international home buying has surged in the past quarter for diversification purposes.
Investors are looking to markets where property values are likely to steadily rise and, more crucially, where property values are not subject to the same economic forces that affect a large percentage of their domestic holdings.