Research article

The bricks and mortar billionaires

The creation of wealth by real estate entrepreneurs may not be especially large on the global stage at present but it is extremely lucrative.

Only 5.4% of the world’s UHNWIs made their money primarily from real estate but those that did are worth, on average, twice that of their non-real estate counterparts.

It would appear that it takes time to make money from property. The average age of UHNWIs whose primary industry it is was 60, compared to 58 for all UHNWIs generally.

Those most likely to have made money this way were found in Oceania, where 8.2% of all UHNWI wealth was created in real estate activities. Australia, in particular, seems to have offered opportunities in the past to real estate entrepreneurs. They have been instrumental in the development of major cities, urbanisation and resort development, which happened some while ago, so the average age of the property mogul here is 65.

Meanwhile, only 4.3% of African UHNWIs have real estate as a primary industry. It would appear that the immaturity of the market here has meant that this is not a big source of private wealth in comparison to other sectors. However, the maturation of property markets in Africa may well change this in the future and provide more opportunities for wealth creation.

A higher than average, 6.7% of Asian UHNWIs have real estate as a primary industry. The total wealth of these individuals is US$1.8 trillion and their average holdings US$610 million each. This compares to an average holding by all global UHNWIs generally of US$139 million. So Asian markets appear to be the most lucrative in which to create a real estate fortune, and the average age of UHNWIs is younger at 55.

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Holdings and flows

When it comes to real estate, the world is top heavy. The vast majority of big ticket deals and UHNWI holdings are in the northern hemisphere, in transparent, higher value markets. Europe is tops for UHNWI residential holdings, and has been the major beneficiary of commercial cross border capital. Domestic money in North America and Asia has driven commercial investment in these regions.

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