How the various asset classes measured up for the rich

How the various asset classes measured up for the richImage Credit: Supplied

The Knight Frank Wealth Report tracks the favoured asset classes and high-spend pursuits that the rich are likely to indulge in. Some of the key takeaways:

* Private investors accounted for a third of all commercial property deals last year, with ultra high-net-worth individuals contributing an estimated $153 billion (Dh561 billion) of commercial property deals transacted in 2014. They had put in $143 billion a year ago. Such investors are “now looking beyond prime or trophy offices and retail space as a safe haven for their funds; they are prepared to look up the risk curve to non-core locations ...” the report finds.

* Interestingly, 2014 eventually turned out to a relatively quiet year for luxury residential values, rising by slightly above 2 per cent. This compares with the 3 per cent they did in 2013. Luxury prices rose by almost 13 per cent on average across US cities last year, compared with an average of only 2.5 per cent in Europe. “Some previously strong markets such as Dubai (17 per cent growth in 2013) saw prices slow markedly (0.3 per cent in 2014)”, the report notes. “This is in part due to the UAE Central Bank’s mortgage cap, which is stricter for those purchasing properties above Dh5 million. The dampening impact of this kind of prudent macro policy also explains the ongoing weak growth seen in Hong Kong (+1.1 per cent) and Singapore (down 12.4 per cent).”

* When it comes to getting about in privately owned jets, US routes dominate by making up 60 per cent of private flights starting and ending within that space. Europe was the second-largest market with a 25 per cent share, with London’s “standout performance in Europe as an investment destination confirmed by the fact that 30 per cent of the most frequented routes in this region either start or finish in the UK’s capital city”. While Dubai and the UAE as a whole are seeing increasing traffic, the Middle East’s position as the world’s third-largest market is being challenged by the rise of traffic in China and Brazil, the report adds.

* Among the other niche assets that the rich prefer to stock up on, classic cars were again the top performer in the annual index created by Knight Frank, with a gain of 16 per cent. Art — with a gain of 15 per cent — made a strong comeback after “years of limited or even negative growth”. Coins were the other asset class to record double-digit growth, although Chinese ceramics and wine performed more strongly than in recent years. Furniture was the only component on the index to lose value.



Source: Manoj Nair, Associate Editor,



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