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Super-rich to choose Beijing and Shanghai over Paris, research

By Giulia Cambieri

London and New York attract the highest number of wealthy individuals investing in property, but this could change in the future, with fast-emerging cities such as Beijing and Shanghai gaining popularity.

That’s according to The Wealth Report 2012 published by high-end real estate firm Knight Frank and Citi Private Bank. Based of a survey on high net worth individuals with investable assets of more than $25 million (€18.7 million), the study found prime properties in London and New York were the most sought-after among the super-rich, followed by houses in Hong Kong, Paris and Singapore.

Six of the 10 most popular cities were in Europe or North America, with Miami, Geneva and Berlin respectively ranked sixth, seventh and 10th. Shanghai (eighth) and Beijing (ninth) also made the top 10.

However, the report suggested this will likely change in the next decade. While London and New York will probably maintain their prime positions in the next 10 years, Paris may not fare as well – Shanghai and Beijing are expected to oust Paris and Hong Kong from the top five by 2022.

This party reflects the movement of wealth towards the Asia-Pacific region, said the report. China, south-east Asia and Japan combined now have more individuals with wealth of more than $100 million than either North America or western Europe.

The study also found that more than half of HNW individuals investing in property considered personal security (63%), economic openness (60%) and social stability (51%) the most important factors when choosing a city. These were followed by the availability of luxury housing (27%) and education systems (21%).

Luigi Pigorini, chief executive of Citi Private Bank in Europe, Middle East and Africa, reckons this may explain why London ranked first. “With English a popular second language and a relatively weak pound, [HNW individuals] have confidently focused their interest on London and the wealth preservation it can afford,” he said.

When acquiring a second home, 67% of the wealthy said they were more interested in lifestyle and investment than tax (6%) and business opportunities (5%) – 40% of those surveyed already owned a beach-facing house and 16% a ski chalet.

The study found that the super-rich increased their allocation to prime property by 19% in 2011 and this trend is likely to continue this year.

“Those markets considered ‘safe-haven’ locations continue to attract private investors looking for both prime residential and commercial property. Political and economic uncertainty across the world is only helping to exacerbate the trend,” said Andrew Shirley, the report’s author.