A new survey/report indicates Europe has the fastest-growing population of rich and super-rich and they’re really keen on acquiring luxury real estate as an investment. Not surprisingly, considering Brexit, British citizens are the most active buyers.
The number of high-net-worth individuals with a minimum net worth of 1 million euros – known colloquially as HNWIs – increased in Europe by 4.5 percent in 2018, 50-percent more than in any other region in the world, according to research by Moscow-based Tranio and ILP Group Ltd, based in London.
Those HNWIs are on a buying spree, with the report indicating the volume of real estate transactions related to luxury property steadily increasing from the downturn of the Great Recession in 2011 through to 2018.
Tranio released the 20-page “Luxury real estate in Europe: a market trend analysis” last month. The report comes out of a survey at ILP Group’s Monaco International Luxury Property Expo 2019 and other aggregated data.
UK nationals are currently to most active buyers on the European luxury property market (3 percent), followed by the citizens from Germany and Belgium (15 percent each), according to the report.
With everyone talking about the possibility of recession – which likely will bring on a recession – real estate is projected to benefit, not collapse as in the Great Recession, according to the survey:
With signs of a looming global economic slowdown, high-net-worth individuals (HNWIs) are looking to diversify their portfolios with non-traditional investments — as opposed to the standard set of equities
and bonds — including luxury real estate.
Here are some of the highlight of the report, which pulls data from a number of sources including Wealth-X.
Key take-aways from the report:
• The number of millionaires in Europe has increased year-by-year, with a total of 5.71 million on the continent in 2018. The vast majority of buyers are either Western Europeans or Russians.
• Investors buy luxury property in Europe for two main reasons – for leisure purposes and for income. But the market has also by boosted by the number of properties purchased to rent out to the micro-travel market, trips of less than five days.
• The UK and Germany have the highest number of ultra-high-net worth individuals in Europe in 2019. While UK nationals are currently the most active buyers on the European luxury property market, Germany has the highest number of ultra-high-net-wealth individuals in the world—people with a minimum of $30 million in net worth.
• The Top 3 most popular European countries for luxury real estate investment are Spain (27 percent of survey respondents), the UK (23 percent), and Italy (19 percent).
While the leading motivation is purchasing a holiday or second home, buying for investment — including both rental income and capital gains – is just as popular.
• Nearly all of the largest and mid-sized cities in Europe are seeing increasing demand for luxury real estate. Among these cities are capitals (Berlin, Paris, Amsterdam, Lisbon), large cities (Munich, Frankfurt) and upscale locations (Monaco, Cannes).
Notable exceptions are Oxford and London, where prices have declined, by -3.9 percent and – 4.4 percent respectively.
• Luxury real estate buyers prefer center-city locations rather than suburbs. Only 38-percent of respondents choose to be outside of city limits, while 59 percent chose to buy inside the city.
• Tranio’s survey indicates at least 10 percent of European luxury residential property is bought “off-plan” during project development or at the start of construction to get ahead of appreciation trends. And it’s difficult for investors to find relatively affordable stock on the market.
• 61 percent of the respondents report that luxury apartments are favored over villas or mansions when it comes to rental income.
Tranio is a Moscow-base broker with offices in Bryansk, Spain (Barcelona, Alicante, Torrevieja) and Germany (Freiburg). More than 11,000 people per day visit the Tranio website, and the company’s revenue grew by 18 percent in the past year. In 2017, 26 percent of all the company’s transactions involved foreign clients. In particular, Tranio closed several large commercial real estate transactions in Germany to nationals of Pakistan, Turkey and South Africa.
See more Tranio research here.
About International Luxury Property Expo:
Based in London, the International Luxury Property and Residency Expo is a series of exhibitions dedicated to high-end real estate, residency and citizenship by investment programs, and personal financial consulting. During the past four years, the firm has organized 17 events in eight cities around the world.
Co-CEO of Dispatches Europe. A former military reporter, I'm a serial expat who has lived in France, Turkey, Germany and the Netherlands.