Every year, Knight Frank, one of the UK’s leading real estate consultancies releases their Wealth Report, with insightful commentary and updates on property investment opportunities across the globe, wealth distribution and luxury real estate trends. This year’s report is particularly interesting for the major shifts that have occured due to the global pandemic in the world of real estate, technology and the way the market moves.
Here’s what we learned from the 2021 Knight Frank Wealth Report (download here)
The intersection of tech and real estate will drive innovation
The Attitudes Survey – with responses provided by over 600 private bankers and wealth advisors across the globe – highlighted the importance of tech innovation and its position as a key area for growth. Specifically, there was a prominent increase in sustainable investing (ESG) compared to 12 months ago and a growing demand for green and energy-efficient buildings.
Upward trend in real estate investments
Despite the impact of Covid-19 on wealth distribution, real estate is still a preferred option for investors and will continue to rise. Unsurprisingly, the pandemic has also highlighted wellness lifestyle real estate opportunities in places like the Caribbean, the Alps,
the Italian lakes and Aspen. Around 26% of UHNWIs (Ultra High Net Worth Individuals) said they are planning to upgrade their main residence in 2021. Access to nature, more space and covid-free locations were the most prominent reasons for the purchases.
Inequality gap has become clearer due to the pandemic
Almost half of the respondents in the Attitude Survey expect to see new policies and regulations regarding wealth inequality and taxes. The main assumption here is that governments will need to recover huge costs and losses due to the pandemic and changing how the rich are taxed is a favourable tactic with voters as well.
Relocations on the rise for access to technology and education
According to Vincent Magnenat of Lombard Odier Group and the results of a recent study of UHNWIs across Asia, “over 80% recognise that access to technology has and will continue to increase inequality. However, they also believe that technology can narrow it by, for example, providing widespread access to education. But we need to invest in the right infrastructure and roll it out for everybody. Coupled with private capital, technology can have a transformative impact, and we believe that UHNWIs have a pivotal role to play.” Interestingly, over 11% of Asian UHNWI house purchases are due to educational motives (families with children, etc) with London as the preferred option.
International travel will remain low
The survey results confirm that international travel is still a weak possibility, with 84% of respondents saying they will be travelling less than usual this year. Regarding the prime residential locations around the world, like Paris, London, Hong Kong and New York, travel bans – not to mention rising political tensions – have slowed down investors and buyers from finalizing plans, however, interest remains high.
Focus on the cities
A lot of interest was given to how cities can become the next hubs for innovation and sustainability. Cities all around the world are racing to implement climate action plans according to the UN’s Race to Zero challenge. This will require the development of new infrastructures and it is an opportunity to reimagine what urban centres look like. Lancaster in California, has partnered with SolarCity to encourage businesses and residents to adopt solar energy systems and make the shift towards clean energy. Other cities across Europe and Asia are following suit with their own initiatives.