Knight Frank launched its 2020 Wealth Report at Chelsea Barracks, a new luxury residential development in Belgravia, London

Last week saw the official launch of the 13th edition of Knight Frank’s Wealth Report at Chelsea Barracks in Belgravia, London with a new focus on on data relating specifically to ultra-high net worth individuals, providing invaluable insight for investors and those seeking to buy new homes. Here’s what you need to know

Wealth is increasing on a global scale

Despite geopolitical uncertainty, the global number of ultra-high net worth individuals (UHNWIs) is still growing and is expected to rise by 27% over the next five years, taking the total to an estimated 649,331.

The US still dominates with the largest UHNWI population (240,575), followed by China (61,600), Germany (23,000), France (18,800), Japan (17,000) and the UK (14,400). India has the fastest growing UHNWI population with an estimated 73% rise over the next five years.

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New York wins for lifestyle

The report assesses 100 cities based on their global appeal as a place to invest, live and spend time. This year, New York came top, pushing London into second place followed by Paris, Hong Kong and Los Angeles.

Wellbeing is a new priority

According to The Wealth Report Attitudes Survey, 80% of UHNWIs are dedicating more time and money into their wellbeing. There is also a growing focus on wellness as a measure of national performance with Oslo in first place followed by Zurich and Helsinki tied in second place.

And so is sustainability

This year’s report discusses the impact of luxury travel on the environment, featuring insights from William Mathieson, Intelligence Director of The Superyacht Group and Thomas Flohr, Founder and Chairman of Vistajet into how their businesses are becoming more sustainable.

Read more: Darius Sanai’s Luxury Travel Views Spring 2020

Residential trends are changing

The report also includes the latest results from the Prime International Residential Index (PIRI), which places Frankfurt at the top of the second homes market, followed by Lisbon, Taipei, Seoul and Houston.

Lord Andrew Hay, the Global Head of Residential at Knight Frank, presenting data at the launch of this year’s Wealth Report

10 neighbourhoods to watch according to Knight Frank’s property experts:

1. Road to Amizmiz, Marrakech, Morocco
2. Fengtai, Beijing, China
3. Sentosa, Singapore
4. Sydney Harbour, Australia
5. St Martin-de-Belleville, The French Alps, France
6. SoPo, Berlin, Germany
7. Mahou-Calderón, Madrid, Spain
8. Maida Vale, London, UK
9. Museum District, Houston, US
10. Imperial Beach, San Diego, US

To view the full wealth report visit: knightfrank.co.uk

Restoring the Garrison Chapel

The Garrison Chapel was constructed in 1859, and functioned as an active church for 150 years before it was deconsecrated. In 2018, after an extensive refurbishment supported by the Chelsea Barracks Chapel Trust, the building was reopened as a community arts and culture space.

Watch the below video to learn more about the project:

Chelsea Barracks – The Garrison Chapel from Chelsea Barracks, London SW1 on Vimeo.

For more information on Chelsea Barracks visit: chelseabarracks.com

The number of ultra-high-net-worth individuals in the Philippines is forecast to grow at the the second fastest rate of any country, says Knight Frank’s Wealth Report 2019. Pictured here: Manila

Lord Andrew Hay. Image by John Wright

Lord Andrew Hay is Global Head of Residential at Knight Frank, the international real estate consultancy, and has built up property portfolios for some of the wealthiest people in the world. In this regular column, he is handed a theoretical sum of money by LUX and asked how he would invest it. This month, we asked Lord Hay where he would invest if he had $200m to spend on real estate in emerging markets

“Where would you invest if you had $200m to spend on real estate in emerging markets?” It seemed appropriate that I was asked this question by LUX having just returned from a business trip to Manila. With the Philippines front of mind – this is where I would start.

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As reported in The Wealth Report 2019, the number of ultra-high-net-worth individuals (UHNWIs) in the Philippines is forecast to grow by 38% in the five years to 2023, the second fastest of any country. In Manila, the Business Processing Outsourcing (BPO) facilities sector is rapidly growing – currently employing 1.5m Filipinos, 1.5% of the population, and accounting for 7.5% of the economy – with the government aiming to expand this to 10-11% in 2020. This growth has boosted office rents within the metro Manila region as well as the residential market as investors snap up multiple units to lease out to BPO employees working nearby.

I would then move my attention to India. Recently the Government of India has put in place a growing number of incentives to enter India’s warehousing sector and this is an area, which seems ripe for investment. The new ‘Make in India’ programme was created to encourage manufacturing; the development of multimodal transport networks and the setting up industrial corridors such as The Delhi Mumbai Industrial Corridor (DMIC) are also supporting growth in the market.

India’s warehousing sector is ripe for investment, according to Knight Frank’s Andrew Hay. Pictured here: Mumbai

My focus would then turn to an investment in South Africa and to something that appeals to me on a more personal level – a game lodge and reservation. As interest in climate change, sustainable tourism and the concept of “natural capital” grows around the world, there is an increasing focus on Africa. Much of this is centred on South Africa and projects that can add significant value to denuded agricultural land, especially if the “Big 5” are in residence.

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Back to Asia, I would look to South Korea. The government recently introduced a pre-sale price cap policy in an effort to cool its housing market. However, this currently only applies to four areas in Seoul. House prices in certain prime areas of the city have been recording price growth in excess of 15% year-on-year over the last 12-18 months, as developers rushed to redevelop older buildings. Going forward, this move is expected to rapidly cool speculation in the market and reign in accelerating prices but there is still an opportunity to invest here.

There are no restrictions on foreign nationals acquiring property in Romania, making entry into the market easier for investors, says Andrew Hay

I would then consider closer to home in Europe – the Romanian prime residential market. It recorded promising results in the first half of 2019 and, according to Knight Frank, 60% of developers active in the local market expect price increases of up to 10% per square metre in the next year. There are no restrictions on foreign nationals acquiring property in Romania either, making entry into the market easier for investors than many other markets.

Perhaps not the most glamorous of locations or assets but nonetheless a diverse and interesting portfolio and this is where I would invest $200m if considering investment across some of the world’s emerging markets.

Find out more: knightfrank.co.uk

Lewa Wildlife Conservancy, Isiolo, Kenya. Image by David Clode

Philanthropists have long played a huge role in wildlife conservation, but now a more holistic approach is needed in a world where humans and nature increasingly live cheek by jowl

Andrew Shirley

Sometimes, to see the bigger picture, you have to turn things inside out. For decades, wildlife conservation, particularly in Africa, has focused on what lies within the boundaries of national parks, reserves and other protected areas, many of which owe their existence to the fortunes of benefactors and donors enthused with a passion for the environment.

But despite their efforts and the hundreds of millions, if not billions of dollars spent, the continent’s wildlife is still in a state of precipitous decline. Now, there is growing recognition that part of the solution is to be found on the other side of the hard and not-so-hard boundaries separating man from nature.

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To many, the conservation battleground in Africa is a war – literally, conducted by both sides with military-grade equipment and planning – against the illegal trade in ivory and rhino horn. And wildlife isn’t the only victim. Paul Milton, founder of the Milton Group, an advisory firm to a number of ultra-high-net- worth families with a combined interest in over 1.5 million acres of conservation lands in Sub-Saharan Africa, has seen evidence of this first-hand. The story from just one community in Mozambique is harrowing. Scores of children orphaned; fathers lost while poaching or through long-term incarceration; mothers forced into prostitution to survive.

Huge sums are spent to thwart poaching, but too little on addressing the reasons that drive people to do it. Having interviewed many poachers, he says, they want just two things: food security and work. Asking someone who already spends millions on conservation to fund employment creation isn’t an easy sell, yet long term, generating local economic value offers a more sustainable means to reduce poaching.

Conservation and the hospitality industry that springs up alongside it does create jobs, but it’s not enough. Park boundaries that ten years ago were relatively devoid of habitation are now marked by informal settlements of hundreds of thousands of people – the fences of some of the world’s most iconic wild spaces are used as washing lines.

Creating buffer zones around parks is one solution, but only increases the sense of dislocation between local people and wildlife. Even the word ‘conservation’ is controversial due to its colonial undertones: high-minded thinking from afar, divorced from the daily realities of existence.

Part of the problem is that very little attention has been paid to how population growth and infrastructure development, such as new transport corridors, increasingly affect the disparate conservation zones scattered across Africa. The base data exists – the world has been comprehensively mapped from space – but nobody has thought to join the dots in Africa. A new initiative between mapping and geographic information system providers ESRI, Nasa and The Peace Parks Foundation, coordinated by Milton Group and the UN, looking at a ten-million-hectare swathe of Botswana, South Africa, Zimbabwe and Mozambique, should act as a framework for a more unified approach to conservation.

The other elephant in the room is that conservation in its current form isn’t financially sustainable over the long term. Since the financial crisis, the NGO model appears to have hit a glass ceiling and even the most deep-pocketed philanthropists don’t wish to leave money pits for future generations.

Tourism was long regarded as the answer, but alone, it is no silver bullet. At the top end of the market, the cost of providing luxuries to attract big-spending visitors to remote areas makes it difficult to generate huge profits. Further down the chain, the volume of guests on more affordable safaris can damage the flora and fauna supposedly being protected.

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Well-resourced individuals and families, however, are looking at new hybrid hospitality models involving impact investment, public/private partnerships and hospitality programmes for their exclusive use. This model is particularly suited to private reserves, however most of Africa’s protected spaces are under a wider umbrella of stewardship. More innovative models are required, that may not be linked to the protection of a species, but to the wider benefits to society, such as carbon sequestration that can mitigate the speed of climate change. The payment for this ‘natural capital’ could come from companies looking to offset their own carbon emissions.

In my role as editor of The Wealth Report I’ve been lucky enough to see first-hand the amazing work being done by philanthropists in Africa, whether conserving existing wild areas or rewilding landscapes given over to agriculture. The success stories are awe-inspiring. But a new narrative is required that accommodates the needs of people as well as wildlife, one that is not imposed on the continent, but works in harmony with it.

For UHNWIs looking to get involved in conservation, there is a unique opportunity now to shape that narrative. Some advice: let your passion drive you, but don’t let it overwhelm your decision making. Work out where your efforts will have most impact; an isolated block of land may be ideal for a private reserve, but somewhere providing a corridor between existing conservation areas may offer longer-term benefits. Visit existing projects, assemble a team of experts, talk to potential partners and don’t look at wildlife in isolation, the local community is an equally important part of the equation. Finally, have a clear vision of how your project will be financed in future to protect your legacy.

Many wealthy individuals have created their fortunes by turning things inside out to create new perspectives. They still have a huge role to play in safeguarding the world’s wildlife.

The Wealth Report, a guide to prime property and wealth trends, is published by Knight Frank. knightfrank.com/wealthreport

This article was originally published in the Autumn 19 Issue.

Grevillia is a waterfront residence on the port of Saint-Jean-Cap-Ferrat, on the market for €56m

Lord Andrew Hay. Image by John Wright

Lord Andrew Hay is Global Head of Residential at Knight Frank, the international real estate consultancy, and has built up property portfolios for some of the wealthiest people in the world. In this regular column, he is handed a theoretical sum of money by LUX and asked how he would invest it. This month, we asked Lord Hay where he would buy if he had £50m to spend on a single home

“If you had £50m to spend and could buy a property anywhere in the world – where would you choose?” It sounds like a question you’d ask your friends at a dinner party and actually is something I get asked quite regularly. My answer often changes as there are so many places around the world where I’d love to live, but having just returned from my summer holiday and with the thought of sunshine and the Mediterranean fresh in my mind along with this healthy budget, I would have to choose Saint-Jean-Cap-Ferrat on the French Riviera.

Cap Ferrat is glamorous yet unspoilt. It has been a firm favourite of aristocracy and Hollywood celebrities over the years and is arguably one of the most exclusive addresses in Europe. It is easily located between Monaco and Nice, accessible both by car and helicopter making it a huge draw for wealthy clients looking for a second or third home and is somewhere they go to escape.

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As we describe in the latest Knight Frank Prime France Report, the 1.3km forested peninsula is home to around 500 spacious villas on large plots and has one of the strongest international buyer profiles on the French Riviera. The Eastern side is home to the best beaches, the Port and the old town, it offers the widest array of amenities, whilst the west has a steeper coastline and good views. There are two Michelin-starred restaurants – La Voile d’Or and Le Cap and the small marina has around 560 berths.

Contemporary interiors of luxury villa Grevillia

When a client arrives on Cap Ferrat, they always ask for homes with direct access to the sea and that’s what I would look for. And, with Knight Frank recently opening its sixth office along the Cote d’Azur in Cap Ferrat, and its 22nd office in France, my team would be primed to help me.

Two properties in particular stand out to me. The first being Grevillia, on the market for €56m. This is an exceptional, waterfront residence on the port of Saint-Jean-Cap-Ferrat. It is a beautiful modern estate, comprising a principal villa, a secondary villa and a guest house – ideal for someone like me with a large family and friends who regularly join us on holiday.

Villa Neo is built into the hillside above the bay of Villefranche-sur-Mer, on the market at €15m.

The second is Villa Neo, on the market at €15m. Significantly under my €50m budget but it is a perfectly presented villa, built into the steep hillside above the bay of Villefranche-sur-Mer and provides idyllic Riviera scenery. The villa’s wide terrace, infinity pool and principal rooms face the Mediterranean Sea so by day the small sail boats moored in the azure water provide a languid but ever-changing picture while after dark, the lights of the peninsula gently sparkle against the night sky.

Read more: Louis Roederer International Wine Writers’ Awards 2019

Property prices on Cap-Ferrat range from €2,000,000 to over €200,000,000 with the most active band between €5,000,000 and €10,000,000. Prime property prices have increased by 4 per cent in the year to 2018 but this is a most extraordinary market, one that resonates far and wide with international buyers and also those based in Monaco looking for a nearby escape with a slower pace of life. The unique homes on glorious Saint-Jean-Cap-Ferrat make the market anything but predictable.

Cap Ferrat not only has a timeless quality which my wife Claire, being half-French, would adore, but it also has one of the broadest international buyer profiles of all the markets on the French Riviera. This helps protect owners’ exit strategies by ensuring the market isn’t dependent on the economic fortunes or currency shifts of one particular buyer nationality.

Find out more: knightfrank.co.uk

Italy retains its place as one of the most desirable second home destinations in the world, says Andrew Hay. This property, Le Bandite is located in Umbria with easy access to Rome

Lord Andrew Hay

Lord Andrew Hay is Global Head of Residential at Knight Frank, the international real estate consultancy, and has built up property portfolios for some of the wealthiest people in the world. In a new regular column, he is handed a theoretical sum of money by LUX and asked how he would invest it. We kick off by handing Lord Hay £100m and requesting a global residential property investment portfolio

When LUX’s Editor-in-Chief generously offered me the opportunity to “invest” £100m into property, I was unsurprisingly delighted to accept. I have had free rein on where and what I buy, but have decided to invest with both my head and my heart. The reason being – I want to enjoy the properties I purchase but also have a clear focus on investment returns.

With this in mind, I have divided my allocation into equal thirds, between high-end luxury residential property, residential investments with a focus on capital growth and rental returns and investment into student property and senior living. The final 10% I would invest into an agricultural portfolio.

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I have to start in London. Often the best investment strategy involves an understanding of which markets are the least fashionable at the moment – and with Brexit and tax hikes London has been underperforming in recent years.

With few London neighbourhoods having a global brand as strong as Chelsea’s, I firmly believe that Chelsea is the perfect example of an area that has been underperforming and which is now ripe for reassessment.

Prices here have fallen 20% since late 2014, compared with a 12% fall across the wider prime London market. While new-build property in this category achieves a premium, established property trades at between £1,200 and £1,800 per sq ft. With many properties now edging below £1,000 per sq ft, Chelsea is back in the spotlight and cheaper than some less central and glamorous neighbourhoods.

Interiors of a luxurious villa residence overlooking Lake Como

Yes, the area still lacks the connectivity of other prime neighbourhoods. However, with easy access to the river, unrivalled shopping on the King’s Road and Fulham Road and some of London’s best schools within walking distance – including the Lycée Charles de Gaulle and the London Oratory School – and the promise (or maybe hope) of a station on the future Crossrail 2 underground railway, Chelsea is set for rediscovery.

The next place I would invest is the other side of the world: New Zealand. New flights and rapidly increasing connectivity to Asia means the country is increasingly becoming a go-to destination. Auckland is the logical entry point and investment destination. One location in particular stands out to me – home to the 2021 America’s Cup, Wynyard Quarter is changing fast. Over the past decade, this waterfront precinct, once the heart of Auckland’s marine and petrochemical industries, has emerged as a major hub for national and international corporates, including Fonterra, Datacom, Microsoft and ASB Bank, as well as for the city’s innovation and co-working scenes.

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Staying in Australasia, I have to include Sydney in my portfolio – a market that has seen a huge growth in investment over the past two decades from around the world. The city may be remote, but education has been a driving force in attracting Chinese purchasers. The one location I would target is One Barangaroo – Crown’s new development. One Barangaroo is one of the most beautiful developments in the world currently being built and is achieving record prices on the shores of Sydney Harbour overlooking the bridge and the Opera House. It has brought a new global standard of facilities and services to the city.

New York design firm Meyer Davis have crafted designed the interior layouts of residences at One Bangaroo

View down to the harbour from One Barangaroo, the latest residential development in Sydney

In Europe, Italy retains its place as one of the most desirable second home destinations in the world. The new flat tax initiative however has cast the country in a new light as a potential permanent base for the world’s wealthy. Italy is certainly worth a closer look. Property prices in many Italian prime markets declined 40% in peak-to-trough terms following the financial crisis, interest rates remain at record lows and the country is better connected than ever before.

In the US, the West Coast is of especial interest to me, the combination of lifestyle and economic dynamism here is unparalleled anywhere else in the world. One area which appeals to me is Pasadena. Home to the Rose Bowl stadium, NASA’s Jet Propulsion Laboratory and the California Institute of Technology, Pasadena offers an attractive combination of relative value compared with neighbouring communities in Beverly Hills and West Hollywood, and the desirable lifestyle and privacy that residents of Los Angeles seek. The neighbourhood is easily accessible, with a light rail line that puts it within 15-20 minutes of Downtown Los Angeles.

Read more: Kuwait’s ASCC launches visual arts programme in Venice

In terms of growth areas I would point to student accommodation and retirement. Student in particular is counter cyclical (i.e. typically more students in a recession). Participation in tertiary education globally is increasing – OECD predict 8 million internationally mobile students by 2025 (up from 5m today). Markets remain structurally undersupplied. In terms of where Sydney looks good it has a big student population and low pipeline due to shortage of development land. In terms of development, I like big European cities like Barcelona, Lisbon and Paris. European markets comprise with very little existing organised supply. Europe is new front for portfolio development, scale building and brand.

At the opposite end of the age scale is senior living where the market is undergoing rapid growth, underpinned by demographic shifts that are increasing demand for a wider array of specialist housing to suit the changing needs of older purchasers. London and the South East, Bristol and Edinburgh are key UK senior living markets. Globally, America, Canada and Australia are at the forefront of investment.

Finally I would invest in farmland. Choosing where to invest in agricultural land depends very much on your appetite for risk but the world faces both a water shortage and food shortage by 2040 and 2050 respectively and therefore, investors looking at long-term food security are well advised to invest in agricultural land. With the world’s fastest growing population, Africa offers some very exciting opportunities. Zambia, for example, provides a good balance of relative political stability and established infrastructure. The Asia-pacific region is seeing a huge growth in wealth and rain-fed farms on the east coast of Australia are well placed to take advantage of this market.

And, that’s my £100m invested.

Find out more: knightfrank.co.uk

Knight Frank’ Wealth Report directs ultra-high-net-worth individuals on where to invest in property and reflect $3 trillion of private client investment into real estate annually. The countries that have been most robust and performed best over the last decade have been those where there is a steady political and economic situation as well as transparent rule of law, high quality living and first class education. The above portfolio choice reflects this.