“Opportunities have no boundaries,” says Donald Trump. And the billionaire property mogul should know: with new office and residential projects underway in countries as diverse as India, Brazil and Georgia, it is an exciting time to diversify, he told the Financial Times. “We’ve been expanding internationally for some time now . . . There are a lot of opportunities and many good reasons to do so.”
But while Trump is known for having made both his first and his second fortunes in real estate, he is increasingly joined by an emerging class of private investors, many of whom struck it rich elsewhere. Amancio Ortega Gaona, the world’s fourth-richest man and founder of the high street Zara chain, has built up a property portfolio that could be worth more than $6.1bn, according to Bloomberg. Ortega’s holding company, Ponte Gadea (also known as Pontegadea Inversiones), recently snapped up Devonshire House in London for £400m, as well as a property in New York’s Meatpacking District for a total of $94m.
The super-rich have always invested their wealth in real estate, but with new high-profile investors like Ortega, global property is coming to the fore as a prime asset class. Though the estimated values of Trump’s and Ortega’s portfolios are comparable, Trump dismisses any suggestion of competition with these words: “I tend to be ahead of it.”
Ultra-high-net-worth individuals (those with more than $30m) typically hold about a quarter of their wealth in property, according to the 2014 Knight Frank “Wealth Report”. The percentage of their total net worth invested in property rose from in the past year, the survey adds. Memories of the economic crisis – partly sparked by the collapse in the value of investments in commoditised bundles of low-end mortgages – are fading; the top end of the property market has increased exponentially and the commercial sector is booming. Overall, investors – private or otherwise – spent $1.2tn on high-end commercial properties in 2013, an increase of almost 80 per cent on 2010, according to Real Capital Analytics, a firm focused on the investment market for commercial real estate.
With $51bn flowing into prime commercial properties (those worth more than $10m) this year alone, New York and London remain the favoured destinations for investors looking for opportunities. They each offer history, location and long-established wealth, according to consultants at Knight Frank Real Estate. And both cities are seen as safe havens for investors fleeing domestic, political or economic uncertainty.
“Whenever there’s a lot of trouble going on in the world, or seems like there is, it is especially attractive for investors in troubled areas to invest their money elsewhere,” says Ben Carlos Thypin, market analyst at Real Capital Analytics.
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.