The coronavirus pandemic has forced millions of people around the world to shut themselves up temporarily in their homes over the past year. And the ultra-rich have not been an exception, although having a millionaire wealth has helped them to seclude themselves in properties where confinement was more bearable or, if they did not have one, to buy it. What characteristics do the wealthiest on the planet look for for their houses? “There has been a greater interest in real estate properties that have outdoor spaces and are far from large urban centers,” answers the Barnes Global Property Handbook, a kind of yearbook in which the Barnes agency analyzes the luxury real estate market.
The study is based on surveys carried out among its select clientele and other analyzes of the sector and focuses on the so-called Ultra Hight-Net-Worth Individuals. These, better known in the jargon of luxury by the acronym UHNWI, are those that have a net worth of more than 30 million dollars. And according to the estimates of the yearbook, in 2020 they also suffered the ups and downs of the crisis, although they recovered quickly. If at the end of 2019 there were slightly more than 290,000 ultra-rich people in the world, the figure dropped to 238,000 with the first stages of the pandemic, although in September some 280,000 were already counted.
The reason for this oscillation is none other than the shocks that the world markets took, since a significant part of these fortunes, which together are close to 27 trillion euros, is invested in Stock Exchanges and other types of assets liquids. In fact, only 6.1% of the total assets held by the richest (about 1.8 trillion euros) were luxury properties.
But at the same time that they saw their fortunes decrease or grow again, the same change of mentality was installed in the billionaires as in many other citizens. “It is a trend that we can see all over the world right now: they are looking for a safe investment, but also a safe place to live with their family,” explained Thibault de Saint-Vincent, world president of the Barnes group, during a virtual presentation of the I study the Spanish press this Thursday. In this context, it has abounded, it is where the concept of “semi-principal residence” has made its way. In fact, according to a survey of 1,850 Barnes customers conducted in November 2020, nine out of ten said they expected to spend more time in the future in a second residence and 72% agreed with the idea of having a semi-primary residence. , that is to say, a house that would normally be considered a vacation or leisure-related but is preparing to spend more time in it and work from there.
That has upended the best cities for the ultra-rich index that the agency produces annually. If traditionally this has roughly coincided with the places where the most billionaires live (New York, Hong Kong, Tokyo, Los Angeles, Paris and London), in 2020 these cities have been displaced by others where the highest quality of life is imposed . The classification is made with financial, practical (schools, transport …) and emotional (culture, restaurant …) criteria and represents an absolute triumph in 2020 for medium-sized European cities. In fact, Zurich (Switzerland) climbed from the 30th position of 2019 to the first place. The Danish capital, Copenhagen, and the Swedish capital, Stockholm, also make great leaps, going from 35th and 22nd positions to second and fifth. Tokyo is the only one of the regulars that saves the furniture and remains third, while the USA sneaks to Miami in fourth place (27th in 2019).
Madrid, by the way, falls from the tenth position achieved in the year before the pandemic to the 16th. And Barcelona once again is out of the ranking of the 50 best cities on the planet for the ultra-rich. An important component weighs in Spanish cities: both are highly dependent on foreign buyers in the luxury segment. “We come from a complicated situation, but we are very confident in this market and in the recovery of real estate in the coming months, as the international situation and vaccination normalize,” said Eduardo Crisenti, managing partner of Barnes Madrid.
For this expected recovery, both cities have an important accolade from the super-luxury real estate agency. The yearbook usually highlights a series of places as interesting sources to invest and in this 2021 the two Spanish metropolises are well positioned. Madrid is in sixth place (after Paris, Geneva, London, New York and Quebec) with a perspective of cheaper flats in this market segment of between 1% and 5% depending on the neighborhood. Barcelona appears seventh, where the outlook in the study is stable, although “there is possible negotiation because sellers are going to need to sell to regain some liquidity,” explained Emmanuel Virgoulay, partner at Barnes Barcelona.
A competitive advantage for Spain is prices, which are still quite far from the world meccas for high-end brick. The Salamanca neighborhood in Madrid, with 6,675 euros per square meter has the highest average amounts, followed by La Zagaleta (an urbanization on the outskirts of Marbella), with 6,638 euros per square meter, and the Turó Park area in Barcelona, with 6,000 euros per square meter. They are prohibitive locations for most of the population, but still far from what can be paid for a house in some world capitals. In Hong Kong, the report highlights, the average amount per transaction (counting all residential, not just luxury) exceeds 1.2 million dollars. The German city of Munich is second with an average spending of one million dollars per house and the city-state of Singapore is third (915,000 dollars).
But as out-of-town getaways go, the Barnes yearbook also points to ocean and mountain settings where the wealthy are more actively looking to buy homes. The French origin of the agency can be seen in the beach locations, where the coast of the French Basque Country, the Côte d’Azur and the island of San Bartolomé, in the Caribbean, figure among the top five positions. Completing that classification are the Hamptons, a classic of vacation luxury on the east coast of the US, and Forte dei Marni in Tuscany (Italy). For mountain lovers, the ski resorts of the Swiss and French Alps are on the rise. But also those of Whistler Blackcomb (Canada), Niseko (Japan) and Jackson Hole (USA).
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.