Billionaires Favor North America as Primary Investment Destination
Rewritten Article:
Billionaires are eyeing investments in real estate, stocks, gold, and private equity over the next year, according to UBS. But the ultra-rich who make their money in the real estate game have underperformed compared to their industrials and tech peers, with gains of just 30% over the past decade.
The UBS Billionaire Ambitions Report cites the Chinese real estate crisis and sudden interest rate hikes in the U.S. and Europe in 2022 as contributors to this sluggish growth. Interestingly, nearly a third of the surveyed billionaires intend to keep more cash on hand for the next twelve months, despite real estate's recent struggles! Cash reigns supreme, baby.
More than 80% of billionaires are setting their sights on North America for the next round of investments, as opposed to Asia/Oceania (excluding China), marking a significant shift from the previous survey.
Tech billionaires continue to dominate the scene, experiencing large wealth increases in the past. But their focus has shifted to areas like generative AI, cybersecurity, fintech, 3D printing, and robotics. The US is expected to lead in these fields.
Industrial billionaires lag behind tech titans but not by much, with their wealth increasing 178% to $1.3 trillion. They've been enjoying government support for the green economy, company relocations, and industrial policy measures favoring aerospace and defense companies, and electric vehicle manufacturers.
But things took a downturn in 2020, with billionaires' wealth growth slowing significantly since then. The slowdown is largely attributed to mainland China, where the wealth of 427 billionaires decreased by 16% to $1.8 trillion over the last five years.
Germany, however, has a different story to tell. The majority of its super-rich are heirs, not self-made, making it a land of multi-generational billionaires according to UBS. These heirs have passed down a combined $1.3 trillion over the last ten years, with more wealth expected to be transferred over the next 15 years.
Global family governance and flexible, globally oriented solutions are becoming increasingly important to high-net-worth clients. Despite complex family structures, these solutions must cater to the needs and ambitions of individual family members. Family governance remains crucial, especially when involving subsequent generations.
Real estate may offer stability, but it falls short in growth and diversification compared to sectors like tech and industry. Sensitivity to global economic trends, regulatory changes, and slower recovery from downturns can hamper real estate's returns. The tech industry, on the other hand, benefits from rapid technological advancements, disruptive innovations, and active management strategies that can quickly pivot in response to changing market conditions.
Regardless of the asset class, one thing is certain: the world of the super-rich is continually evolving, with new trends and opportunities arising every day.
- Notwithstanding the underperformance of real estate investments over the past decade, a third of the surveyed billionaires plan to keep more cash on hand for the next twelve months, indicating a preference for liquid assets over businesses like real estate.
- In contrast to traditional sectors like real estate, tech billionaires are shifting their focus towards emerging fields such as generative AI, cybersecurity, fintech, 3D printing, and robotics, with the US anticipated to lead in these areas, demonstrating the dynamic nature of investing in the digital age.
