According to last Wealth Report prepared by Knight Frank company, the contribution of private investors to real estate market totaled 153 billion USD in 2014 – which constitutes one quarter of the amount of all transactions. It is a noticeable increase by 7 percentage points in comparison to 2013.
The people from UHNWI (Ultra High-Net Worth Individual) constitute a large group among private investors – that is very wealthy people with assets totaling or exceeding 30 million USD. This group conducts financing of transactions with the use of companies, private investment offices and family funds.
The economists from Knight Frank forecast that the activity of private investors will be increasing in the nearest future due to a good condition of a global economy and low prices of oil. It allows to increase the capital intended for consumption goods, and then – it is a perfect occasion to invest in properties.
Where do the richest from the UHNWI group invest? Properties from outside primie sector, that is structures which are not the most prestigious ones arouse more and more interest. Private investors are interested in the areas which are less obvious and they are certainly prone to take risk of placing their money there. The increased investment movement is noticeable on the outskirts, on local markets and outside main central institutions.
Each investor who locates their money in properties knows that in the period of lean years it is the best option to place the assets in safe investments on the prime market, such as offices in Manhattan or shops at the Avenue des Champs-Élysées. However, when economic situation is becoming to improve, more risky investments are truly occasional and they generate income – says James Robert, main economist in Knight Frank.
The total amount of all transactions on the real estate market amounted to 619 billion USD in 2014. The specialists from Knight Frank forecast that the year 2015 may bring about another 6 per cent growth in investments which are financed from means of private investors.