Among The Top Ways The Ultrarich Spent Their Money Last Year Were Real Estate Investments Worth $455 Billion

The ultra-rich invested billions in commercial real estate and high-end goods despite the outsized losses caused by the worsening global economic climate in 2022.

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According to Knight Frank's wealth report, which was released on Wednesday, the world's affluent invested $455 billion on commercial buildings, whether in their own capacities or through family offices.

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Although though it was lower than the record-breaking $493 billion in 2021, it was still the second-strongest year ever and 62% higher than the 10-year average.

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Institutional investments in commercial real estate totaled $440 billion, a 28% decrease from the previous year, although private capital outpaced them as well.

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Notwithstanding persistent geopolitical and financial obstacles worldwide in 2022, the research stated that private investment remained strong.

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According to Knight Frank, the ultra-wealthy kept 26% and 21% of their money in equities and commercial real estate, while keeping 32% of their overall wealth in residential residences.

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"Back in style" are art and automobiles.

According to the Knight Frank Luxury Investing Index, investments in luxury collectibles surged by 16% in 2017.

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The gauge's best-performing item was art, which increased 29% yearly. Around $2.5 billion was generated by single-owner collections, which included items purchased by American investor Anne Bass and Microsoft co-founder Paul Allen.

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Double-digit growth in the market for classic cars reached 25%, the highest level in nine years. With a price tag of $143 million, the Mercedes-Benz Uhlenhaut Coupé easily broke the previous record for the most expensive vehicle ever sold.

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According to Knight Frank's interview with Dietrich Hatlapa, founder of the investment research business Historic Vehicle Group International, high-end collectors have returned to the market after the COVID-19 pandemic caused a significant decline in sales.

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Generally speaking, the classic automobile market "marches to the beat of its own drum," according to the report, and neither has a positive or negative association with other industries. Many collectors find that characteristic to be appealing.

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Although rare whiskies and other categories only maintained 3% yearly growth, early investors saw 10-year returns of an average of 373%.

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The world's ultra-rich lost $13.8 trillion, or 13.6%, of their wealth in 2022, despite the increased investment. This follows a sharp increase in inflation, which prompted central banks like the Federal Reserve to raise interest rates sharply, driving down the price of bonds and stocks.

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The report's executive editor, Flora Harley, stated that the decline in wealth was predictable given the abrupt change in monetary policy that led to the classic blended portfolio's worst performance since the 1930s.

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In fact, for the first time since 2001, investors can make more money keeping cash than a conventional stock-bond combination.

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On Tuesday, the weighted average earnings yield of the S&P 500 and the Bloomberg USAgg Index of bonds were used to calculate the yield of the so-called 60/40 portfolio of US stocks and fixed-income assets, which had a yield of 5.07%. In the meantime, the six-month US Treasury note yield reached a record high of 5.16%.