Where are HNWI Moving to?

1.1 Billion is the number of new city dwellers globally in the next 15 years. Nearly equivalent of the population of India.

A street in London

Imagine now starting a business, creating a luxury brand, and accessing to a market of 1.1 billion people within the next 15 years. In fact, 15 years is not really much time for any luxury brand when compared to the more than one hundred and two hundred years that many luxury brands have kept their heritage. It is estimated that global HNWI wealth will reach US $70 billion by 2017, an increase of 7.7% annually from late 2014 until 2017. Can you imagine how much will this figure grow by 2030?

Madrid 1
View of Madrid

Well, that is the market that the prestigious real estate consultancy Knight Frank estimated in its Global Cities Report 2015. If you want to really know where to position your luxury brand, you must know and thoroughly study this report because it reveals how the greatest cosmopolitan cities are growing, where most of the wealth of the world and the best business opportunities are concentrated.

While the United States and China contributed in 2014 with more than half of the growth of the global HNWI population and wealth evolution in 2014 at high rates of 6.7% and 7.2%, respectively, although more modestly than during 2013 when growth was around 14.7% and 13.8%, respectively, strong growth in India, some countries in Latin America, Eastern Europe and Africa has been observed, and therefore has changed the focus of some luxury brands to newer scenarios they didn’t think of before.

Madrid Londres 1
View of London (Photo: Hayes Davidson)

According to Knight Frank, four cities have exceeded the growth of their own country, led by London which overtook the UK by 72.0% in GDP per capita, followed by Paris who beat France by 66.8%, too far behind is New York who beat US by 35.7% and finally Madrid, which exceeded by 30.4% the average GDP per capita of Spain.

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Map of the commercial space market in Europe. (Source: Knight Frank)

Taking into consideration the increase in office rents as an indicator of the growth of wealth in a city, we can see how Madrid ranks second after San Francisco in the Top Ten of the world’s major cities with higher offices price growth. This indicator should be taken as a reference not only in terms of investment opportunities, but also as an indicator of the demand for space that is taking place in every city where business opportunities are being generated.

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Rent office forecast for the next 5 years. (Source: Knight Frank)

If we pay attention to the growth of housing prices, Knight Frank establishes four scenarios in which ranks 27 major cities in the world. We can look at this table whether as investment opportunities or as a reference on how are cities attracting HNWI – it should be noted that in Madrid prices are rising after the real estate crisis that collapsed the entire country. It is noteworthy too, the strong price growth in cities that already have a very high price level on their homes such as Los Angeles, New York, Munich and Shanghai.

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Growth in rental prices in cities. (Source: Knight Frank)

Finally, another fundamental aspect when assessing the investment of brands in a given city, we see the price of square meter of commercial space in which Madrid stands out as one of the capitals with a much more affordable price than Moscow , Paris or London and with an upward trend, which positions the city with enormous investment opportunities for the next 15 years.

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Top view of taxis in Mexico City.

On their hand, Mexico City with 20 million inhabitants is the 5th most populated city on the planet. Mexico City is, in recent years, attracting large amounts of investment in both Foreign Direct Investment and Real Estate investment. In the last 20 years, Mexico City added more than 45 million square meters of offices. With the growth rates the country is reaching, it would not be surprising that this figure will double in the next 15 years.

Imagine a city with more than 250,000 UHNWI. That city is the World and its dwellers are eager to know your brand. And now, where do you think your brand should invest next?

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