Highest ever residential deal in Barbados was done at USD 35m
Edward de Mallet Morgan, partner at Knight Frank, talks about top property investment locations and advises on what UHNW clients should be aware of when buying a property.
What interesting sales have you seen in the global property market?
We have just done our highest ever residential deal in Barbados at $35m. London, New York and LA continue to include very large deals and Monaco and Switzerland are popular.
What kind of properties do UHNW investors buy?
Their need to buy in a location is often driven by a number of factors, such as family or work commitments, rather than pure investment reasons. Most of the properties are bought as a luxury rather than an investment. But the property purchase needs to make sense so some like to rent their holiday homes to contribute towards the ownership costs, although there are also those who don’t. UHNW buyers are helped by the fact that they have the liberty of being able to hold properties through economic downturns.
If they are buying in a very expensive location, they will often be surrounded by other owners of similar means, meaning that this can insulate an area against potential falling values elsewhere or nearby. If you look at Saint-Jean-Cap-Ferrat in the South of France, this is one of the most expensive addresses in the world with some properties worth in excess of ‚Ç¨100m. We have a number of owners who might like to sell, but do not need to. So, although there may have been offers on properties which an agent thinks looks sensible, an owner may have a different opinion. Ultimately, a property is worth what one person is prepared to pay for it at any given time.
What should UHNW investors be aware of when buying a property?
Security, neighbouring developments, local taxation on property or otherwise, currency rates, ease of funding, track record of values and sales in that area, length of lease if leasehold, transport infrastructure, service or ownership charges if it’s a multi-unit new development, and transaction costs. Also, they should be mindful of impending or likely political or fiscal changes.
What trends do you see in the real estate market?
Increasing wealth will continue to want to be in the most desired and perceived stable markets. This is why London and New York have seen such strong investment in recent years. Buying in locations with low crime levels and high levels of security and perceived safety are becoming more important. If you then combine this with a luxury product to invest in and tax advantages, locations such as Monaco, Switzerland, the Caribbean, and even places like St Barths or Mustique, and the Bahamas will benefit.
There is still a degree of passion involved in any purchase and the strongest reason for buying in a location is simply because UHNWs spend time there or visit. If they have the means to buy a property then why not benefit from any potential capital appreciated over the medium to long term, with their own staff, chefs, valets, and drivers, catering to their every need.