Dubai: From buying serviced hotel apartments in New York to golf course villas in Dubai and vintage Porches, the world’s super rich are now increasingly moving away from the traditional way of investing, wealth experts have said.
The high-net-worth individuals, those with private fortunes worth at least $1 million (Dh3.6 million), are looking outside the familiar world of stocks, bonds, time deposits and fixed income investments, as these traditional assets offer meagre earnings.
According to PWC and Strategy& estimates, as the affluent continue to diversity, the amount of money invested in alternative investments will continue to grow over the next few years and hit $18.1 trillion by 2020, from $10 trillion in 2015.
And among these alternatives, proving increasingly popular recently are not your typical flat in a high-rise tower, but apartments manned by big-time hotel brands like The Ritz, as well as houses in the golf estates of Dubai and 50-year-old cars.
Last year alone, millionaires had $5 billion worth of vintage Porches, Ferraris, Aston Martins and other pricey classic vehicles parked in private garages. At one auction in August 2017, affluent buyers snapped up $327 million worth of classic cars.
And there’s a valid reason why the super rich are into old vehicles: the values have been rising exponentially. Over the past ten years, average classic car prices rose by a strong 160 per cent, making it the best performing investment class for HNWIs over the period, according to New World Wealth’s in-house indices.
Aside from classic cars, rich investors are also increasingly acquiring art pieces. New World Wealth estimated that HNWIs around the world held $75 billion worth of fine art at the end of 2017. Over the past ten years, however, the value of art pieces didn’t move as much, rising only by 12 per cent but they remain an important form of investment for the super rich.
Residences in hotels
There’s also a growing number of HNWIs acquiring properties maintained by notable hotel brands.
Hotel residences appeal to millionaires, particularly those who travel a lot, because the facilities are maintained on a regular basis whether the tenant is there or not, and they provide access to room service, cleaning, and a host of facilities, including pool, spa, entertainment and dining.
Residential estates, such as those villas in golf courses are another growing segment and among those popular are Jumeirah Golf Estates in Dubai, Wentworth Golf Estate in Surrey, UK and Yellowstone Club – Big Sky in Montana, United States.
“Reasons for their rising popularity include security (access gate, private security personnel); activities (gym, swimming pool, golf, horse riding, skiing, tennis); lifestyle and community - parks, gathering places, children playgrounds, schools and limited and controlled traffic [which means it’s] safer for children,” New World Wealth said.