Prime real estate is expected to thrive this year. There will also be opportunities in the ESG (environmental, social and corporate governance) sector, according to Knight Frank’s The Wealth Report 2022. However, taxation is one of the disruptors facing the industry, it warns.
The report aims to provide an annual assessment of how wealth creation is shaping investment markets while highlighting the opportunities and risks.
The panellists at the presentation of the report on March 3 included Knight Frank’s head of private office Rory Penn, global head of research Liam Bailey, The Wealth Report editor and head of rural research Andrew Shirley, The Wealth Report deputy editor Flora Harley, head of commercial research William Matthews, head of international residential research Kate Everett-Allen, private office partner Sarah May-Brown and head of UK residential Tim Hyatt.
The average value of luxury residential property increased by 8.4% in 2021, says the report, the highest annual increase since the Prime International Residential Index (PIRI 100) was launched in 2008.
“Of the markets tracked, only seven saw prices decline in 2021. We dive into the numbers pointing to the outperformers (44% growth in Dubai), the most expensive (you need US$34 million to access the top of the Monaco market) and the most in demand (53 nationalities own property in Provence, Europe’s most diverse market),” it adds.
During the online presentation, Harley said, “The standout story really was the movement of wealth into the prime residential property markets. Our prime international residential index, which benchmarks 100 markets around the world, saw record performance with an 8.4% growth year on year on average. And that’s the highest on record that we’ve seen since 2008.”
Penn said, “We’ve seen a lot of reassessment of housing needs from a number of wealthy individuals, as they sort of are no longer tethered to the office; they can now potentially move further away. And that’s had a big impact on demand. The Americas was the top performing region. We saw, on average, markets there increase by nearly 13%.”
“London is seeing growth. The prime market is up by 2% to 3% [depending on where you are in the city]. It has been a slow market over the past few years. In the last year, we have seen positive growth that isn’t rapid. But there is certainly an increasing confidence in the market,” said Harley.
“We’ve also seen renewed interest in commercial sectors that have been hit hardest by the pandemic, be that offices, hotels and retail.”
Source: The Edge Markets
