According to Quintela + Penalva | Knight Frank and the European takeways from the Wealth Report 2023, luxury prices remain strong in Portugal with increases of 6% in Lisbon, 12.7% in Porto and 15.5% in the Algarve.
Across Europe, the level of aggregate wealth held by ultra-high-net-worth individuals UHNWIs fell by 17.3% in 2022. This is higher than the global decline of 10%.
Of the European markets surveyed, wealth advisors in Italy and Spain said their clients’ wealth had increased the most, by 36% and 34% respectively.
The top three drivers behind wealth performance in 2022 were real estate, currency trades and market timing.
On average, 32% of European UHNWIs’ total wealth is allocated to primary and secondary homes, the ﬁgure is higher in Austria (59%) and Italy (42%).
European UHNWIs are more optimistic than those globally with 74% expecting an increase.
Global prime luxury residential prices deﬂated from 8.4% growth in 2021, but didn’t collapse, with average growth of 5.2% recorded in 2022 in the PIRI 100. Prague, the Algarve, Athens and Porto were Europe’s top performers with annual price growth of 16.3%, 15.3%, 13.0% and 12.7% respectively.
Amongst European cities Madrid, Paris, Lisbon and Dublin lead our prime price forecast with each expected to see prices increase 4% in 2023. Zurich (3.5%), Monaco (3%) and Vienna (0.5%) complete the top ﬁve.
For current relative value, US$1 million can buy 17 sq m of prime luxury internal ﬂoor space in Monaco,34 sq m in London, 37 sq m in Geneva,43 sq m in Paris, 70 sq m in Berlin and 106 sq m in Madrid.
On average, Europe’s ultra-wealthy own 3.8 homes, marginally higher than 3.7 homes globally and higher than the 2.7 figure in the Americas. Some 16% of European UHNWIs bought a home in 2022, while 15% are planning to buy a home in 2023. Our HNW clients said the investment, lifestyle and safe haven motivations were the top reasons for purchasing. Some 29% of Europe’s ultra-wealthy own homes overseas, lower than the 35% in the Americas but significantly higher than the 12% in Australasia.
Top of the preferred list of locations for European UHNWIs are Spain, Italy, France, the US and Portugal.
Luxury prices remain strong in Portugal with increases of 6% in Lisbon, 12.7% in Porto and 15.5% in the Algarve.
How are UHNWIs creating wealth in 2023
Ten key findings from Knight Frank annual Attitudes Survey 2023 giving insight into ultra- high-net-worth-individual investment trends.
1 - Global movement has been tempered by the pandemic, but the desire to be mobile is proving resilient. Some 13% of UHNWIs are planning to apply for a second passport or new citizenship, down from the 15% recorded in last year’s report.
2 - Globally, a third of total wealth is allocated to UHNWI’s primary and secondary homes. More than a quarter is held outside their country of residence, on average. UHNWIs in the Middle East (41%) have the highest global footprint.
3 - The average UHNWI owns 4.2 homes globally. UHNWIs in Asia have the greatest appetite, owning an average five homes each. This demonstrates the unwavering global appeal of residential property
4 - Higher interest rates will temper demand for residential property in 2023. Some 15% of UHNWIs are looking to purchase a residential property this year, down from 21% in the previous year’s survey. Appetite is highest amongst Middle Eastern UHNWIs.
5 - The US, UK and Spain are the top three locations for purchasing homes. Australia and France round out the top five.
6 - UHNWIs are increasingly diverse, both by geography and asset class. More than a fifth of our respondents’ investable wealth is directly invested in commercial property and a similar proportion is held overseas.
7 - Real estate was identified as a top opportunity, both for direct and indirect investment. One in five UHNWIs are planning to invest directly in 2023, with 13% looking for indirect opportunities. This is broadly in line with the 20% of last year’s survey, indicating the attraction of property as a haven during economic uncertainty.
8 - Healthcare, logistics/industrial and offices are the top target sectors for UHNWIs in 2023. The private rented sector (PRS) and hotels/leisure complete the top five. Around a third of respondents are interested in each of the top five sectors in 2023.
9 - Energy source (57%), opportunity for refurbishments (33%) and materials used/the embodied carbon footprint (30%) are increasingly being looked at by UHNWIS when purchasing investment property.
10 - Art is set to remain the most sought-after investment of passion in 2023 with 59% of UHNWIs likely to make a purchase. Watches come in second, with 46% looking to purchase, followed by wine with 39%. In terms of how much they will spend – art is again at the top, followed by classic cars and wine.