London is the preferred place for the ultra-wealthy to buy a home or invest in property for the second year running, according to the Knight Frank Wealth Report 2014. It also shows the number of ultra high net worth individuals (UHNWIs) – defined as people with at least $30m (£17m) in assets – totalled 167,669 last year, little more than the population of Kensington and Chelsea. Their combined wealth amounted to $20.1tn.
To put this into perspective, a recent report from Oxfam showed that the wealth of the 1% richest people in the world amounts to $110tn, or 65 times as much as the poorest half of the world. The 85 richest people – who share a combined wealth of £1tn, as much as the poorest 3.5 billion people in the world – could squeeze on to a double-decker bus.
London was home to the most multimillionaires in 2013 and this will still be the case in 2023, with nearly 5,000 expected to be living in the UK's capital by then. Singapore and New York will leapfrog Tokyo and Hong Kong to take second and third places.
London and New York have been jostling for position at the top, and the Big Apple is poised to overtake the UK's capital again as the most important city for the ultra-rich by 2023. However, in coming decades both are set to be eclipsed by Asian cities, where luxury property markets are booming.
Liam Bailey, global head of research at Knight Frank, said: "History, location and their long-established wealth mean that London and New York's positions look unassailable, at least for now. It is further down our leader board that the real city wars are being waged. The main battleground is Asia, where a handful of locations are slugging it out in the hope of establishing a clear lead as the region's alpha urban hub."
But he reckons London and New York will always be popular. Their clusters of businesses, international appeal, heritage and democracy are not easy to replicate. "London wins over New York: It's more diverse. There are more nationalities living here and it's a more global city," Bailey added.
Geneva and Paris have slipped down the list of global hotspots. This year, Singapore, Hong Kong and Geneva make up the rest of the top five cities for the world's millionaires and billionaires. By 2023, Shanghai is expected to knock off fifth-placed Geneva. In the Middle East, the top five includes Istanbul and Abu Dhabi, close behind Dubai in first place.
Globally, the UK is the number one destination for those seeking a new domicile, although the US is still more popular with Asian multimillionaires.
The ultra-rich are getting richer. They like to spend their wealth on jewellery, especially in emerging markets, followed by art, watches, wine and cars. While art may be his favourite investment, Indian property developer Abhishek Lodha says the one luxury he can't do without is organic food. For Singaporean politician Lawrence Wong it is early retirement.
Knight Frank's Bailey said 70 billionaires are busy investing in space travel and asteroid mining. With a suborbital space flight, you can travel from London to Sydney in two hours. "If this ever happens, how would this impact on property markets?"
The number of UHNWIs around the world rose by 3% last year and is poised to grow by nearly 30% over the next decade. Africa will see the most new multimillionaires, with the number doubling.
Asian cities, led by Jakarta, the Indonesian capital, experienced the fastest growth in property prices last year, but some of the cities affected by the 2008 downturn – such as as Dublin – are now on the road to recovery, according to Knight Frank. Jakarta posted annual growth of 37.7% in luxury property prices, followed by Auckland with 28.8% growth, Bali (22%), Christchurch (21.4%) and Dublin, where prices climbed 17.5%.
Asian towers top the list of the most expensive high-rise office space in the world. Hong Kong boasts the priciest skyscraper offices. A new skyscraper index from estate agent Knight Frank bases their commercial value on an analysis of the capital value of upper-storey floor space. Upper floors typically command the highest rents, achieving what are referred to as 'nose bleed' rents in Manhattan.
James Roberts, head of commercial research at Knight Frank, said: "While Hong Kong and Tokyo are too far ahead to lose first and second place, I see some competition amongst Manhattan, London and Singapore in the coming year. In London there is renewed confidence thanks to better than expected economic growth and rising rents in the office market, and I suspect London could overtake Singapore."
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image: © John Mitchell