I am thrilled to introduce the 18th edition of the Wealth Report, providing a comprehensive analysis of the trends and insights in the global wealth and real estate markets. This year’s report brings a sense of optimism as wealth creation rebounds, interest rates stabilize, and the real estate landscape presents new and exciting opportunities for investors.
A Shift in Wealth Trends
In 2023, the global wealth held by Ultra-High-Net-Worth Individuals (UHNWIs) faced a decline due to various economic and geopolitical pressures. However, the outlook for 2024 is considerably brighter. Wealth creation has returned, driven by a robust US economy, an improved equity market, and an expected decrease in interest rates. As a result, the number of UHNWIs globally increased by 4.2%, with nearly 70 very wealthy investors minted each day, bringing the total to over 626,600. Growth was led by North America and the Middle East, indicating strong regional investment opportunities.
Real Estate’s Continued Appeal
The resurgence in wealth creation has reinforced the affinity between private capital and real estate. Approximately a fifth of UHNWIs are looking to invest in residential property in 2024, and the same proportion is considering commercial real estate. Despite higher debt costs and the challenges of adapting to greener, more sustainable stock, the potential for well-financed investors in the property sector is enormous.
Key Findings: Residential Real Estate
Prime Residential Prices on the Rise: Despite the rise in interest rates, capital values for prime residential properties grew by 3.1% across the world’s leading markets. Asian markets led the way, followed by the Americas.
Prime Market Outlook: Around 25 leading residential markets are expected to grow in 2024, with Auckland leading the forecast with a 10% increase in house prices, while Sydney is set to lead the prime rental market with a projected 12% growth.
Global Mobility of Wealth: As UHNWIs become more willing to move across borders, emerging wealth hubs are challenging established cities. We explore how Paris is competing with London, New York and Los Angeles’ branded future, and the race between Hong Kong and Singapore to attract Asia’s new elite.
Key Findings: Commercial Real Estate
Slower Growth in 2023, but Recovery on the Horizon: Commercial real estate faced a challenging year in 2023, with investment volumes dropping by 46%. Despite this, private investors were the most active, accounting for 49% of the US$698 billion market.
A Recovery in 2024: With interest rates set to decline, commercial real estate looks poised for a rebound. Investment focus will likely be on sectors like healthcare, life sciences, and secondary offices in prime locations.
Sustainability and Emerging Trends
Sustainability and ESG: With a 27% chance that 2024 will see the average rise in global temperatures surpass 1.5°C, UHNWIs are increasingly focusing on sustainability in their investment decisions. Two-thirds of them are actively reducing their carbon footprint.
AI in Real Estate: AI investment has the potential to transform the real estate sector. Our report highlights how AI-driven technology can help identify new market opportunities, and its role in reshaping demand for specific real estate use types.
Generational Shifts in Wealth
With nearly US$90 trillion set to move between generations in the US, and affluent millennials poised to become the richest generation in history, we examine how these generational shifts are impacting investment behavior. The rise of female Gen Z-ers in wealth creation indicates an expanding and diverse UHNWI base, presenting new opportunities for real estate and luxury goods.
The Path Forward
Despite the evolving global landscape, the prospects for wealth creation and real estate investment remain strong. With a projected 28.1% increase in the number of UHNWIs by 2028, the opportunities for astute investors and developers are immense. From the resurgence in wealth creation to the shift toward sustainable practices and the influence of AI, the Wealth Report 2024 outlines the key trends to watch.
The SAEZFROMM team at Douglas Elliman is dedicated to providing you with the insights and expertise you need to navigate this evolving landscape. With offices across the globe, our network is ideally positioned to help you achieve your real estate and investment goals.
I invite you to explore the full Wealth Report 2024 for a comprehensive understanding of the latest trends, insights, and opportunities in the world of wealth and real estate.
