Ultra-high-net-worth individuals, companies and organizations are moving into real estate markets at an increasing rate, according to a new analysis by Savills, an international real estate advisor, and Wealth-X, an intelligence provider on ultra-high-net-worth investors.
Savills estimates the world’s real estate is now valued at $180 trillion, $70 trillion of which is investable rather than owner-occupied. More than half of that is owned by ultra-high-net-worth individuals, companies and organizations, the analysis says. Investing institutions, listed companies and publicly owned entities are becoming less important to world real estate as a result, says Wealth-X.
“Global real estate is mostly residential and held by occupiers, but private owners are becoming more important in the world of traded investable property,” says Yolande Barnes, head of Savills’ world research. “Since 2008, sovereign wealth funds, wealth management companies, private banks and family offices have stepped into the property deals that corporate bankers have deserted.
“In the world’s leading cities, the willingness of private wealth to take the place of debt finance or to take a higher-risk development position is now making the difference between deals done or schemes mothballed,” she adds. Savills estimates that 35 percent of real estate deals valued at more than $10 million in 2012 were only possible because of private funding
Mykolas D. Rambus, CEO of Wealth-X, says, “We forecast that the UHNW population will grow by 22 percent by 2018. Its combined wealth, currently $27.8 trillion, is expected to total over $36 trillion by 2018. This presents huge opportunities for those involved in global real estate investment to create the right product in the right locations.”