In its latest Global Wealth Report, Bayleys strategic partner and international property consultancy Knight Frank highlights how the influence of private wealth is positioned to impact New Zealand’s residential real estate market.
Following a series of geopolitical and economic shocks, a global rebound is underway, with survey results from Bayleys’ global strategic partner Knight Frank in its 17th annual Wealth Report finding residential property to be the preferred investment vehicle for private wealth.
In its Attitudes Survey, the international property consultancy found New Zealand is Australasia’s fourth most popular investment market for Ultra-High Net Worth Individuals (UHNWIs) actively seeking political stability and transparency in relation to asset ownership.
The Wealth Report’s Attitudes Survey findings are based on responses gleaned in November 2022 by more than 500 private bankers, wealth advisors, intermediaries and family offices who, between them, manage more than NZ$4.125 trillion of wealth for UHNWI clients.
Knight Frank identifies a UHNWI as someone with a net worth of NZ$49.5 million or more, including their primary residence.
It estimates there are nearly 20,900 UHNWIs in Australia and 3,118 in New Zealand.
GROWING GLOBAL INFLUENCE
Last year, Knight Frank predicted that Australasia would note the world’s highest ten year growth in UHNWIs, with per capita growth led by New Zealand, expected to produce 4,618 UHNWIs by 2026, up from 1,249 in 2021.
The prediction comes at the same time the New Zealand Government has stepped-up efforts to attract more high-value investors to Aotearoa via streamlined application processes for New Zealand residency through its Active Investor Migrant Programme.
Early estimates show 30 or so investors could pump in more than NZ$300 million-plus of new investment funding into the productive part of New Zealand’s economy each year.
The efforts mirror sentiments gleaned from The Wealth Report, which found 19 percent of UHNWIs intend to invest directly into income-producing property, with investors overwhelmingly reporting residential property as the ‘safest’ asset class.
The most likely markets for investment into New Zealand are Asia and Australia, given proximity to the latter and the growing desire to diversify portfolios and counter headwinds faced in the former’s home market.
Additionally, the report found that wealth and talent were on the move internationally, with the pandemic catalysing massive growth in the desire for mobility and freedom.
INVESTORS SEEK PRIME RESIDENTIAL ASSETS
Despite luxury house price growth slowing globally by 5.2 percent in 2022, investors still sought safety in the long-run capital growth of residential assets, demonstrated by it being the second-strongest year on record for residential asset purchases by wealthy investors.
The report finds that despite significant economic disruptions worldwide, as markets adjust to the post-pandemic comedown and effects of central banks battling persistently high inflation, High-Net Worth Individuals (those with a net worth exceeding NZ$1.65 million including the primary residence) continue to see property as a viable hedge, and a valuable avenue for wealth creation.
While collective investor wealth declined in 2022, 69 percent of those surveyed by Knight Frank expected growth in their asset portfolios over the coming year, with confidence driven by a recalibration in markets, value opportunities, and the hotly anticipated global economic rebound.
It notes that global trends are mirrored in New Zealand, with a push toward legacy properties in spectacular locations, climate-considerate builds, and rental value upside.
Investment from private individuals in New Zealand’s assets remains robust, with proactive investors seeing the value and long-run potential presented by prime residential assets.
Luxury markets like Waiheke Island, the Marlborough Sounds and Queenstown have bucked the recent downturn trend, demonstrating the ‘legacy’ aspect of family-managed investments, which often serve as a means of educating the next generation about investment strategies.
Across the country, every one of New Zealand’s wealthiest families has exposure to the property market, with most using the current market conditions to leverage gains and acquire assets with upside.
As the country’s premium, full-service real estate brand with broad exposure to residential, rural, commercial and industrial markets, Bayleys prides itself on maintaining exceptional relationships with the country’s leading investors and continues to elevate offerings to work discreetly with top-tier clients both at home and abroad.
Looking ahead, wealthy investors will likely rest on tried-and-true investment techniques which have enabled them to prosper at other times of upheaval.
Following the Global Financial Crisis (GFC) in 2008/2009, equity-rich investors persisted through uncertain economic conditions with confidence, a critical feature which drove asset repricing, perceived value opportunities, and ultimately a return to optimism.
Global property consultancy Knight Frank is Bayleys’ global strategic partner, providing our clients with access to an international network spanning 51 markets.