26% of UHNWIs are planning to buy a new home in 2021

26% of ultra-high-net-worth individuals (UHNWIs) on the planet are planning to buy a new home in 2021, according to Knight Frank’s recently released The Wealth Report 2021.

This is up from 21% last year. Liam Bailey, global head of research at Knight Frank says: “Demand is especially strong for rural and coastal properties, with access to open space being the most highly desired feature. The pandemic is super-charging demand for locations that offer a surfeit of wellness – think mountains, lakes, and coastal hot-spots. Demand will help fuel price rises of up to 7% for our key markets this year.”

Meanwhile Kate Everett-Allen, head of international residential research at Knight Frank, says that expectations on second homes are increasing. “With greater flexibility around remote working, owners are lengthening their stays with many now viewing them as ‘co-primary’ homes. From fast broadband to cinema rooms, gyms and A-grade technology, a second home now has a longer wish list to fulfil.”

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Luxury investments of passion

In other news, the report states that Hermès handbags have topped the Knight Frank Luxury Investment Index (KFLII) for the second year in a row, with prices up 17% in 2020, according to data supplied by AMR. Andrew Shirley, editor of the report says, “The market for luxury collectables, which relies on the auction market for much of its profile, is clearly badly affected by the Covid-19 pandemic. But some sectors like handbags are weathering the storm better than higher-value assets like the top end of the art market where no painting sold for over US$100 million for the first time in a number of years.”

Fine wine is next. Wine markets were up 13% in 2020 compared to the previous year, according to Wine Owners, which compiles the Fine Wine Icons Index. That’s because the industry held its nerve, and merchants did not mark down prices. Whisky on the other hand lost some momentum, dropping by 3.5%.

Classic cars is third on the KLFII list, with growth of 6%, and Ferraris the models that performed noticably strongly.

The art market dropped 11% in 2020, with many factors impacting the market. “For obvious reasons, one of the biggest changes was a shift towards private sales at the major auction houses last year,” says Sebastian Duthy of AMR. “The volume of all sales that were publicly auctioned at Sotheby’s and Christie’s was down 26% and 46% on 2019, respectively. The problem was compounded by the slowing of supply of quality works as consigners who could afford to wait, preferred to sit it out at home. Having said that, there was still plenty of enthusiasm from buyers. With a new emphasis on home working, there was a surge in demand from collectors sprucing up their homes.”

Prices remained flat in the coloured diamond market but are expected to recover this year.

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