The world’s super rich are turning from luxury mansions to hotels and office blocks, as they hunt for bigger property deals to preserve their growing fortunes which hit a combined $20 trillion in 2013, data showed on Wednesday.
The move into commercial property comes as wealth levels rebound after the financial crisis and home values in London and Monaco soar, prompting the rich to look for riskier investments that offer higher returns than gold or bonds.
Wealthy individuals spent $11.2 billion on hotels, offices, warehouses and shops globally in 2013, up from $7 billion in 2012 and three times the amount spent in 2008 after the crash, data compiled for Reuters by research group Real Capital Analytics (RCA) showed.
Such high net worth investors, most of whom come from Asia or the Middle East and made their fortunes in manufacturing among other sectors, often already own homes in cities such as London and Hong Kong, said Jeremy Waters, head of international investment at UK-based property consultants Knight Frank.
This is quite a flow of money. It is too bad the article doesn’t talk about the ROI on these office and hotel properties; what kind of investment can be expected in today’s economy?
I wonder if this means there just aren’t many luxury homes left in the world for the super rich. If so, this could mean builders will look for even bigger and more luxurious homes in the near future.