Real estate now accounts for around a fifth of the invested wealth of the nearly 200,000 ultra-high-net-worth individuals (UHNWIs) in the world, according to new analysis from international real estate adviser Savills, in association with intelligence provider, Wealth-X.
Property hunting
In the Middle East, about 26 per cent of the private wealth of these individuals is invested in real estate. While film stars from India, including Aishwarya Rai Bachchan (owner of a villa at Shaikh Holdings’ Sanctuary Falls) and Shah Rukh Khan, continue to be seen shopping for high-value homes in Dubai, the average value of UHNWI real estate holdings in the city is $8 million (about Dh29.3 million), compared to $32 million in Hong Kong, $28 million in London and $9 million in New York.
Four of the largest sovereign wealth funds (SWFs) in the world are based in the GCC, according to JLL’s Global Capital Markets Research released in March. “With budgetary surpluses continuing, the size of SWFs continues to grow and it is conceivable that the Abu Dhabi Investment Authority (ADIA) could pass the $1 trillion mark in the next few years, implying more than $100 billion would be invested in direct real estate if they maintain their 10 per cent allocation.”
High-profile purchasers
The region is taking strides to join the supply side for trophy assets. Jon McGloin, MRICS Commercial Leasing, Knight Frank, says, “Trophy assets, from a global institutional investor’s perspective, in the Middle East remain in relative short supply not due to their location or their design, but the nature of shorter lease structures and a relative lack of single-owned free-market products. However, the market is developing and institutional grade developments and leases are being designed, built and agreed within prime business locations. I envisage further buoyancy of trophy asset transactions across the Middle East in the medium to long run.”
Other buyers are indicating interest too. Carlo Walther, COO of Russia’s property portal Idinaidi.ru, says that he has seen an increase of 137 per cent in searches for property in the UAE in the last month alone.
“Russian oligarchs have never been shy about showing off their wealth and seem to collect properties as others collect art. With their wealth increasing over the past decade and more and more billionaires being created in Russia, owning a prestige property has become the standard way to announce your entry into the billionaire club. And with growing competition among the elite for these prestige homes, they’ve proved to be not only symbols of vanity but shrewd investments too.”
Victoria Garrett, Associate Director of Residential, Knight Frank, says, “An example of a trophy property changing hands recently is a bespoke Signature Villa on The Palm that had been completely remodelled and beautifully interior designed, the full details of which can’t be divulged.”
Some assets acquire desirability due to their unique features. Garrett says that examples of trophy properties in Dubai that the consultancy is marketing a Dh70 million penthouse in Le Reve, an iconic building in Dubai Marina that houses wealthy billionaires and sporting stars alike, and a one-of-a-kind front-facing lateral apartment in Emirates Crown, which was originally two apartments that have been joined together to create an 8,000-square-foot apartment — the only one which stretches across the whole front of the building.
