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Ultra wealthy buying homes as ‘Opportunity Gateways’

September 2015

Buying a second or third home is a popular activity for ultra high net-worth (UHNW) individuals – 79 percent own at least two homes, and 53 percent own three or more, according to the latest study by Wealth-X and the Sotheby’s International Realty® brand released last month.

For many, these decisions are motivated by either lifestyle fit (for example, owning an oceanfront home or lodge near a ski resort), as well as short-term and long-term investment potential. Increasingly, however, some UHNW individuals are buying homes for reasons that go beyond these traditional motivations. The study identified two emerging trends: Firstly, UHNW individuals from emerging market nations seek a safe investment diversification. In the past year, market volatility in a number of nations, particularly in China, has led buyers to seek homes in economically and politically stable locations in the West as a hedge against market uncertainty at home.

The second trend among UHNW real estate investors is home buying as part of a programme to gain citizenship or residency status in foreign nations. In the past decade, several Caribbean and European nations have begun offering programmes through which individuals can gain citizenship status by making a sizable investment in the local economy. The required investments range from USD 200,000 to over USD 1 million and in most cases involve the purchase of real estate.