Reasons Ultra Wealthy are Buying Homes
Buying a second or third home is a popular activity for ultra high net worth (UHNW) individuals – 79% own at least two homes, and 53% own three or more. For many UHNW individuals, these decisions are motivated by familiar considerations: lifestyle fit (for example, owning an oceanfront home or lodge near a ski resort), as well as short-term and long-term investment potential.
Increasingly, however, some UHNW individuals are buying homes for reasons that go beyond these traditional motivations or which take familiar motivations in new directions. For these buyers, homes are seen as ‘opportunity gateways’ and buying decisions are made based on what opportunities will become available as a result of owning the home.
Whilst most homeowners focus on the value of the home itself as well as its potential for capital appreciation, UHNW individuals may have non-traditional motivations such as the stability/diversification benefits of real estate as well as potential citizenship advantages of purchasing properties in certain countries.
Homes have often served as investment vehicles for UHNW buyers, either for short-term gain or as a part of a longer-term strategy, but most of these home purchases are made domestically. A large majority of all UHNW second homes are located within the buyer’s country of residence.
The past quarter has seen a surge of interest in international home buying for diversification purposes; in markets where property values are likely to see a steady rise, and, more crucially, where property values are not subject to the same economic forces that affect a large percentage of the buyer’s domestic holdings.