The release of the latest World Wealth Report shows that rich people are very certain that this is a good time to invest in real estate.
The report, published every year by consulting firm Capgemini and private wealth manager Merrill Lynch Wealth Management, tracks the fortunes of the world’s millionaires and how they make their money.
This year’s edition, notes Berry Everitt, MD of the Chas Everitt International property group, shows that high net worth individuals (HNWIs) are increasing their investment in property. The percentage of their combined global wealth that was invested in real estate rose to 19 percent last year, which was well off the low of 14 percent in 2007.
"What is more, the report shows that, despite the ongoing economic challenges, the total wealth of the world’s millionaires grew by almost 10 percent in 2010, in contrast to the world’s GDP which grew by just over five percent (according to the International Monetary Fund). So the HNWIs are obviously doing something right."
Asia is the region with the highest number of millionaires (3.3-million of them) according to Capgemini and HNWIs in the region have been particularly aggressive in the past two years in pursuing returns in real estate, which accounted for 28 percent of their aggregate portfolio at the end of 2009 and 31 percent last year.
This fondness for property, says Everitt, is especially evident in China with its fast-rising GDP and has contributed significantly to a rapid increase in the number of millionaires in the country whose combined wealth now totals around $10.8-trillion — second only to the $11.8-trillion of HNWIs in North America.
"In addition the Hrun Report, which specifically maps the rise of wealth in China, says that the average age of the Chinese millionaires is just 39 — a good 15 years younger than those in Western countries — and that around one-third of them are women.
"This clearly points the way for greater property investment in Africa which experienced the biggest regional increase (11 percent) in the number of millionaires last year and which is expected to double its GDP over the next 10 years."