Wealth Report: What are the richest people investing in this year?

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An average of 70 extremely wealthy investors were created every day last year, and the trend shows no signs of slowing.

The global ultra-wealthy population grew by 4.2% and is expected to grow by 28% in the five years to 2028, according to property consultancy Knight Frank.

The number of ultra-high net worth individuals (UHNWIs) with net worths of more than $30 million (€27.6 million) worldwide has soared to 626,619 from 601,300 a year earlier, according to the latest wealth report, as hopes of lower interest rates have led to increased investment in stocks, which has boosted stock market values. A strong US economy has also helped the wealthy get even wealthier.

Growth was led by North America, where the number of ultra-wealthy individuals increased by 7.2% in one year, followed by the Middle East (6.2%).

While Europe is lagging in terms of new wealth creation (the number of ultra-wealthy people grew by 1.8%), the continent “remains home to the richest 1% of people,” Liam Bailey, Knight Frank's global head of research, said in the report.

Latin America was the only region to experience a 3.6% decline in the number of wealthy individuals.

The growth in 2023 follows a year in which a series of energy, economic and geopolitical shocks led to a staggering decline in the total wealth of the wealthy of $10 trillion (€9.18 trillion).

“This year we have seen an increase in the number of ultra-high net worth individuals globally, driven by growth in the US and the Middle East and continued demand for real estate from these investors,” Bailey wrote, adding that “demand for capital in the real estate sector has never been higher.”

How much do I need to join the club?

Depending on which country you're talking about, it's generally easier to be in the top 1% of wealth than it is to be one of the super-rich with $30 million. Even in Monaco, the minimum net worth required is less than half that.

What are the richest people investing in this year?

The report suggests that a total of $483 billion (443.5 billion euros) is waiting for investment this year due to the slowing global economy, and predicts that global GDP will fall to around 2.9% in 2024, down from 3.1% the previous year.

The report predicts that continued rifts in U.S.-China relations will lead to increased investment in strategic sectors such as technology, energy and defense.

Additionally, the report said 2024 could be a year of recovery for the real estate market, which was impacted by high interest rates last year, and the residential market may not be hit as hard as commercial real estate (CRE).

More than a fifth of the world's ultra-wealthy plan to purchase residential property in 2024.

Prime locations (the most expensive properties in a given region, typically defined as the top 5% of each market's value) are hot for the world's wealthy, and the report notes that despite high global interest rates and a hit to sales in 2023, the value of these properties will continue to grow by 3.1% worldwide.

And despite a dismal 2023, in which soaring debt costs have cut investment amounts by almost half, almost a fifth of wealthy individuals are considering investing in commercial real estate.

Investors from the Middle East and Asia are expected to be most interested in purchasing commercial property, according to Knight Frank.

“Decreasing values, lower interest rates and forced sales will, as expected, boost investment,” the report said.

AI and Climate Change in Real Estate Investment

The report predicts that roughly 40% of enterprise IT spending will be directed toward AI-related projects by next year, and certain types of commercial real estate could benefit from this shift.

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Demand is expected to increase significantly, especially for data centers located close to cost-effective energy sources, as well as for research-specific office space located close to universities and existing technology hubs.

Moreover, AI-driven building management, including energy efficiency, temperature control, and security, will be a buzzword in the top office market.

According to the report, sustainability is a growing focus among the global HNWIs, with almost two-thirds of UHNWIs striving to reduce their carbon footprint and ranking sustainability as a key consideration in their CRE investments.

Climate change is increasingly impacting the real estate market through changes in crop yields in agricultural regions, shifts in tourism patterns, damage to properties and disruptions to infrastructure.

In the short term, more properties are facing rising insurance costs or being rejected outright by insurers.

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Meanwhile, occupier and investor demand for properties in low-risk locations and energy-efficient buildings is steadily increasing, driving demand for technology that can assist property owners in preparing for, adapting to, and recovering from climate-related hazards and associated damage.

The luster of luxury collectibles is fading

Despite individual sales forecasts hitting record highs for 2023, the report found that certain assets in the luxury market are declining, including rare whiskey (-9%), classic cars (-6%), handbags (-4%) and furniture (-2%).

Although art, jewelry and watches are still trending upwards, the report predicts that this market will see significant fluctuations.

What's going to happen to the world's wealthy in the coming years?

“We expect the number of global HNWIs to grow by 28.1% in the five-year period to 2028,” the report said, adding that this was slower than the 44% increase experienced in the five-year period to 2023.

Growth over the next few years will be driven by Asia, particularly India and mainland China.

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More than two-thirds of the world's richest people (UHNWIs) expect their wealth to increase this year, with younger generations showing more confidence.

Women are becoming a bigger part of the wealthy, and will make up around 11% of the world's ultra-wealthy in 2023. This proportion could rise further, as an astounding 81% of women in Gen Z (affluents) with a net worth of over $1 million (€920,000) expect growth in the next few years, with half of them expecting “significant growth.”

Disclaimer: This information is not financial advice. Always do your own research and make sure it suits your specific situation. Also, please note that we are a journalistic website and aim to provide the best expert guides, tips and advice. Any reliance you place on the information on this page is entirely at your own risk.