Stocks and shares are shunned in favour of sounder investing strategies during these times of upheaval
As restriction measures on personal movement begin to ease across the world, high net-worth individuals (HNWs) are beginning to spend once again, albeit cautiously. With the global pandemic far from over many are looking for long-term assets to secure their wealth as well as investing in items to diversify their portfolios and expand their travel, relocation and business options. Indeed, several billionaires have endured significant declines in wealth in the past twelve months according to the recently published Sunday Times Rich List 2020 with some individuals seeing up to £6 billion wiped from their net-worth.
HNWs are investing in luxury properties in four cosmopolitan cities
Real estate growth forecasts have been revised down for 2020. That said, global real estate consultancy Knight Frank expects growth in just four cities, three of which are in Europe. In the company’s recently released COVID-19 prime residential market update, they stated that: “Lisbon, Monaco, Vienna and Shanghai are the only four major prime residential markets set to see price growth throughout the remainder of 2020.”
Knight Frank estimates prices in these four cities to grow by between 0.1 per cent and 4.9 per cent. However, the degree of uncertainty surrounding market recovery makes putting an exact figure on forecasts somewhat challenging. Of great curiosity is why revival is expected in these international cities and not others, especially since they have indeed suffered due to COVID-19 like many other world cities. It seems that each location holds specific reasons for its rebound and popularity, yet there are some common trends linking these four prime locations together.
Portugal has one of the most successful residency-for-investment schemes in the world. The nation’s Golden Residence Permit Programme has seen applications increase by 50 per cent in 2020 compared with the same period last year, according to a recent update by the residence and citizenship planning consultancy Henley and Partners. Indeed, the update reports that due to the highly volatile situation, HNWs are reassessing the notion of secure investments and are looking to alternate means to secure and safeguard their wealth and families.
Monaco has the highest density of millionaires in the world. The sovereign city-state offers up its residents zero income or capital gains taxes. As such, demand in the property market has remained strong. Interestingly, very few of the 13,000 millionaires do indeed reside full time in the Principality and the surrounding hills of French riviera.
Across the globe in the Asian economic centre of Shanghai, a similar story is playing out where a strong market in the run-up to COVID-19 is aiding investor confidence as the property market tenuously reopens. Pre-pandemic, the cosmopolitan city was the long-standing centre of the Chinese luxury market. Real estate in the metropolitan area was the fastest growing in the country until lockdown measures were introduced in early 2020. Nevertheless, it appears that prudent investors are already jumping on the opportunity to reallocate their wealth portfolios into prime real estate within the city.
Private jet sales are rebounding
Private jet vendors were working with wealthy individuals to provide comfortable and convenient air travel experiences at the start of the year. However, national lockdown measures saw companies struggle, with a reported 70 per cent reduction in private charter flights from mid-March to mid-April.
As lockdown measures are gradually lifting however, private jet sales are seeing a resurgence with the number of private chartered flights steadily rising. Business flights are notably increasing even while scheduled flights remain grounded, reports the global aviation industry market intelligence firm Wing X. Although the current number of flights is well below the average for this time of the year, the current figures are promising. Interest in private aviation is likely due to the strong desire to resume freedom of movement in the relative safety of a private chartered plane.
Investing in art and collectables via online marketplaces
Online art retailers have seen a flurry of activity even while galleries and auction houses remain closed. In April, the London-based online art marketplace Artfinder experienced a 110 per cent increase in its website customers. The online store sold an average of one artistic piece every twelve minutes during the month.
Indeed, the online surge in activity has drawn the attention of the traditional auction houses keen not to miss a potential opportunity. In mid-May, Sotheby’s held its first ever fully online contemporary art day. The event saw a record total of $13.7 million in sales. This was up from the firm’s previous record of $6.4m set in April. 117 lots went to auction on the day in May and they received a 96 per cent success rate, according to the website Art Market Monitor.
These trends show a strong divorce from the typical stocks, share and bonds wealthy individuals most often sink their funds into. Curiously, during times of upheaval and unrest it is typically the most highly prized assets that see demand catapult in the bid to shore up wealth and minimise losses. As lockdown measures gradually ease around the world, investing in prime property, purchasing fine art and collecting exclusive pieces — coupled with the strong desire to travel freely and safely — will likely continue to increase in popularity.