The world’s wealthiest people have around £2 trillion tied up in luxury homes, according to new research.
Just 211,275 individuals considered as of ultra-high net worth because they have net assets of at least £20 million own these properties – and two or more belong to one in eight of this rich elite.
Many of these homes are concentrated in prime residential areas of major cities, such as New York, London, Paris, Geneva and Hong Kong, says research by property consultants Savills International and market research firm Wealth-X.
Homes of the rich
Key findings from the report revealed:
- The value of homes owned by the ultra-wealthy increased in value by an average 8% in the past 12 months
- Property investment was the sole source of income for 7% of the world’s richest – up from 5% the year before
- More wealthy women tend to own property than men – 16% compared to 10%
- Almost double the number of wealthy individuals who inherit their cash are more likely to buy luxury homes than those who are self-made – the figures are 17% compared to 9% of those who made their own fortunes
- Billionaires trade in one of their homes on average every four years
- Second homes tend to be worth 45% more than main homes, be twice the size and sit on 10 acre plots
- 83% of homes in Monaco are owned by billionaires – the highest density in any country
- 6% of the ultra-wealthy are expats but tend to keep a home in their nation of birth
The report also profiles the ultra-wealthy.
Cash stashes
The average billionaire owns four homes worth a total of around £62 million and a quarter of their wealth in cash. The rest is tied up in investments.
Two of the homes are for holidays and held for their investment value.
Although the wealthy can afford to buy their homes in cash, many take out mortgages at special low rates.
Billionaires tend to hold around £400 million, while the ultra-high net wealthy have an average £23 million cash in the bank.
“Cash has been king for the very wealthiest people since the downturn,” said a Wealth-X spokesman. “They understand that having a cash reserve to call on makes them stronger in times of financial difficulty and even when they can afford to buy something, they will often borrow to keep the cash intact.”