Miami is of global focus for Wealthy Real Estate Investors
Miami is becoming more and more important for HNWI’s
Why is Miami becoming more important and how does this impact your investment?
UHNWI’s: Ultra High Net Worth Individuals —> Individuals with a net worth of over $30m
It only requires 5 minutes of walking around Miami to see that this magical city attracts a lot of wealthy investors and residents while the city’s luxury evolution and attraction to HNWI’s seems to be unstoppable.
But what does this mean for Miami and Miami Real Estate Investors? This blog focuses on what makes Miami important to the wealthy, and what makes them want to live in Miami. Global Wealth Researchers of UK based Knight Frank attempted to solve this question by measuring and ranking quality of life and a host of other indicators.
Why is Miami one of the world’s most important cities for (U)HNWI’s
This research takes in a few key indicators to evaluate which cities mean most to the world’s ultra rich
- Unique city-level UHNWI’s population counts ⇒ Approximately 229 UHNWI’s reside in Miami at this moment which is a lower number than in US cities like NYC, Boston, San Francisco, Houston and Chicago. Miami, however is a very new and fast rising star in this list of cities, which only started to get the attention of HNWI’s in more recent years. More and more Europeans and Latin Americans are establishing themselves permanently in Miami making us believe the number of UHNWI’s in Miami will continue to increase.
- The importance of cities for their business links /economic activity ⇒ Miami has long been a destination for ‘Fun in the Sun’ and Retirees before it established itself as the Global Business Hub it is today. Miami is now home to the largest concentration of International Banks south of NYC as well as an increasingly growing number of Internationals establishing their headquarters or Latin American Hubs in Miami.
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- Lifestyle offer / Quality of Life ⇒ You can ask anyone in Miami why they love this city so much and the answer will always be: “I love the lifestyle”. Miami is a laid back city following the work hard, play hard principle. It is not for nothing that Miami has been called the Number 1 happiest place to work in the USA by Forbes. Many High Net Worth Individuals are attracted by the year-round sunshine, the beaches, the nightlife, the enormous offer of high-end restaurants, the amazing real estate opportunities, the new and ultra-luxurious fashion scene and the many international events that are held in Miami (eg. Art Basel, The Formula E)
UHNWI’s and Real Estate Investments
In the 2014 edition of The Wealth Report, almost half of the wealth advisors who took part in our annual Attitudes Survey said that their UHNWI clients would potentially increase their investment allocation to property during the year. In this year’s survey, almost 40% of respondents said that had actually happened.
“In my role advising high-net-worth investors from around the world, it is clear that the demand for property as an investment class is increasing rapidly.”
Deborah Watt, Head of Global Wealth Investments -The Wealth Report Global Capital Markets Survey
Property investments are definitely back on the agenda for private investors, who accounted for around a quarter of all commercial property deals last year, as well as residential investments.
In the figure here below we can see the total UHNWI population in the world, with Asia, Europe and USA having the largest populations, while Africa, Latin America and Asia are expected to have the highest predicted increase in HNWI’s
The USA is of particular interest for South American and Chinese Investors. Alex Foshay, of Knight Frank’s New York Capital Markets team, highlights Miami, which attracts a lot of interest from Latin American UHNWIs, as a case in point. Demand has mainly been focused on condominium developments, but private investors are now starting to look at more commercial sectors.
Regarding Chinese investors, Knight Frank expects them to move beyond the gateway cities of London, New York and Sydney and investing into other key cities, such as Frankfurt, Brisbane, Miami and Manchester. In fact, cities like Miami are already firmly on the radar of the wealthy Chinese investors, as the prices of apartments there are up to 25% lower than in Shanghai. A key trend remains the cultural diversity of the city, and of growing importance is the quality of life offered. These factors will continue to draw in Chinese UHNWIs.
How does this affect Miami Real Estate?
The US sees the highest influx of HNWI’s after London and Singapore. Miami specifically has recently been on the radar of Chinese Investors and is a favorite destination of Latin Americans (U)HNWI’s (No less than 15% of latin American UHNWI’s are thinking of changing their country of residence)
The Influx of so many HNWI’s will have a huge impact on the general way in which Miami is perceived as well as Real Estate Prices in Miami. Looking at the table here below we can already see that Miami’s Real Estate Market performed very well within the USA but also on a global level and prices have seen increases of almost 10%. As the demand for Miami Luxury Properties will increase sellers and future investors are more likely to profit from price increases.
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