David Y Simon Reuben they are not allowing the pandemic to dampen their real estate ambitions.
Since the crisis began, the British billionaire brothers have bet on the Madrid residential market, bought almost 90 hectares of land in the Balearic Islands, from Spain, and acquired retail properties in Manhattan, near Rockefeller Center, from SL Green Realty Corp. for approximately US $ 170 million.
Other wealthy investors show a similar appetite for real estate. Almost half of the 121 family wealth management businesses surveyed by UBS Group AG want to increase their property positions as they seek opportunities and potential deals, according to the Swiss bank’s Global Family Wealth Management Firms 2020 Report. Firms also hope to be more active in generating returns on their cash, with more than a third saying they plan to increase equity allocations.
The capital of Germany flourishes in startups and became the European city that gained the most in the ranking of luxury properties produced by Savills.
“The Covid-19 has confirmed that diversification is the best now,” he said Josef Stadler, head of UBS’s family wealth management business division, in an interview. “Real estate has always been an asset class for diversification, and they have obviously confirmed that category.”
Falling property prices in the wake of the pandemic has created opportunities for cash-rich investors with long-term prospects, and few have horizons beyond family offices. These investment vehicles, with lax regulation, aim to grow fortunes from generation to generation and have fewer restrictions than institutional companies.
The isolation measures initially froze real estate markets, but many nations are now reopening their economies despite the virus re-emerging in some places. With the long-term demand for office space uncertain from the pandemic, the wealthy are increasingly focusing on residential properties, according to Stadler.
According to a Capgemini SE survey, one in five people plan to change their primary wealth management firm in 2021, and the main reason is high fees.
“A lot of private wealth wants to generate returns that they can live on, it’s a wealth preservation play,” he said. Alex James, head of private client business consultancy for real estate brokerage Knight Frank. “By buying prime assets in global cities, they expect the investments to preserve their wealth.”
Many of the world’s rich, from the founder of Zara, Amancio Ortega, to the billionaire banker, Joseph Safra, have long favored real estate, an asset that offers stable cash flows, tax breaks, and opportunities for leverage. Private investors, including family wealth firms, accounted for about a third of real estate investments worldwide last year, according to Knight Frank.
David and Simon Reuben, who did not respond to requests for comment through a spokesperson, made a fortune trading metals and then invested in real estate companies, leisure and technology interests. They have a combined net worth of about $ 12 billion, according to the Bloomberg Billionaires Index.
According to an investor survey, many are hoarding cash in anticipation of a sharp market downturn before the end of 2020.