Real estate is a capital intensive industry and the game belongs to the man with the dry powder. The recently released Wealth Report by Knight Frank tells it all. To begin with, the wealth numbers for 2017 show that New York City had the highest number of Ultra-High Net Worth individuals globally. Los Angeles, Hong Kong and London were not a far off. However, talking about cities, the City Wealth Index sheds some light.
The index, outlines the cities that matter to the wealthy now and in the future.
The City Wealth Index focuses on the four main issues; population of wealthy residents in a city, cities attracting investments of $10 million or more, lifestyle themes like the number of luxury hotels and quality of leading restaurants, average visitor spend and education which is also a significant driver of second home purchases globally. The expected future level performance based on city level innovation and predicted GDP is was also a consideration.
According to the index, New York City emerged the best overall performer, coming on top on each of the four rankings. This was followed by London and San Francisco respectively on a ranking that was dominated by North American cities as well as Asian metropolises.
On wealth in particular, North American cities reigned on the others taking nine of the top ten slots with London filling the tenth. New York appeared as the dominant centre for high net worth individuals based on households earning more than $250,000 annually, double the population of Los Angeles in second place.
For investments, London emerged top owing to its diversity of demand as a result of the diverse number of nationals making investments there. New York which came second however, boasts the largest annual average private property investment over the two-year period to the end of 2017. The ranking on investments was close between North American and European cities but in Asia Hong Kong emerged the best.
New York also scored the highest on future expectations of a high GDP growth with its GDP anticipated to grow to $1800 billion between 2017 and 2022. It was followed by Tokyo with a forecast of $1537 billion and Los Angeles at $1105 billion. In general, North American Cities seem poised for more growth, taking four of the top ten ranks.
On lifestyle, London is the best city with 75 five-star hotels, compared to Dubai’s 61. However, Dubai’s overnight visitors were the biggest spenders, totalling US$28.5 billion in expenditures while New York in second place, recorded a visitors’ spend of $17 billion. But it is in Melbourne, Australia where visitors spend the most per night at an average of $1925 followed by Dubai’s $1917.