In 2022, the ultra-rich suffered the biggest drop in wealth since the 1930s. But they still spent millions on new luxurious homes.
A triple shock hit the multimillionaires and billionaires last year: energy, economy and geopolitics. The war in Ukraine further exacerbated the energy crisis in Europe and the already rising inflation.
In the wake of this, the world’s richest people have lost a tenth of their collective wealth, according to the widely acclaimed “Wealth Report” by real estate agency Knight Frank.
“Historic shock”
In total, the wealth of the “Ultra High Net Worth Individuals” (UHNWI) shrank by the staggering sum of 10.1 trillion dollars. Only four out of ten UHNWIs were able to increase their net worth last year.
After years of enormous increases, the super-rich have thus suffered a “historic shock”. A traditional mixed portfolio, owned by people with a net worth of at least $30 million, suffered its biggest losses since the 1930s last year.
With a drop of 17 per cent, Europeans recorded the largest decline in assets, followed by Oceania (Australia, New Zealand and Pacific Islands) with 11 per cent and North and South America with 10 per cent. Africa and Asia suffered the smallest losses with 5 and 7 percent respectively.
Money is loose in real estate
Despite the drop in wealth, the rich still spent millions on new luxury properties. According to Knight Frank, residential property remains the most popular choice for the wealthy when it comes to where they invest their money. On average, the super-rich have two-thirds of their wealth invested in residential and commercial property, split roughly equally between the two asset classes.
In 2022, each super-rich person owned an average of 3.7 homes, up from 2.9 a year earlier. By comparison, they invested only about a quarter of their net worth in equities and only 17 per cent in bonds. The rest is distributed among private equity, venture capital, art, classic cars, gold and even a small portion in cryptocurrencies.
Dubai cements its status
Monaco remains the most expensive city in the world with 17 square metres of living space for $1 million, followed by Hong Kong (21 square metres) and New York (33 square metres). Geneva is also an exclusive place. Here you get 37 square metres.
The most attractive city for the ultra-rich is the emirate of Dubai for the second time in a row. The metropolis has consolidated its status as a global centre for very wealthy individuals. Prices for residential property in the luxury segment rose by 44 percent in 2022, more than in any other city in the world. The ski resort of Aspen (+27.6 percent) in the US state of Colorado and the Saudi Arabian capital of Riyadh (+25 percent) complete the top trio.
The most attractive Swiss markets
Of the 100 top markets covered by the so-called Prime International Residential Index (PIRI 100), 85 recorded positive or stagnant price growth. Although the average price increase for luxury properties slowed down to 5.2 per cent last year. Despite the lower price dynamics, however, it was the second strongest year in history.
In Switzerland, Zurich (16th) ranks ahead of St. Moritz (17th) and Verbier (17th) among the top 20 markets. Gstaad (36), Geneva (63) and Lausanne (84) also made it into the top 100 markets. Among winter and ski destinations, St. Moritz, Verbier and Gstaad are among the most attractive markets after Aspen, with average price increases of 6.5 per cent and 10 per cent respectively. In Zurich, prices rose by an average of 10.5 per cent.
