Where the Affluent Own SECONDARY HOMES GLOBALLY

HNW consumers rarely own just one property. Among individuals with net worth of $5 million+, Wealth-X data shows that nearly 14% of all global wealth is put toward real estate and other luxury assets, indicating a high number of secondary homes and vacation properties are likely in the mix.

In fact, according to a recent Coldwell Banker Global Luxury survey of affluent international buyers, 84% of respondents said they own residential real estate outside of their home country. These countries include Italy (90%), Turkey (87%), Costa Rica (87%), the U.K. (86%), France

(85%), the U.A.E. (84%), Spain (84%), and Canada (83%). Where will those properties be located, and more importantly, how do those lists compare to the secondaryhome hotspots of 2021? Here’s what we found.

When the U.S. is included, New York once again takes the crown for the most HNW secondary-home owners globally. Four other U.S. cities earned a place on the list, including Los Angeles, Miami, San Francisco, and Washington, D.C., for a total of 290,000 secondary-home owners – more than all of international cities combined, from Beijing to Geneva. New York alone is home to more than 95,000.

If we zoom out globally and exclude U.S. cities, Asia emerges as a major center for secondary-home ownership. Beijing surged to the top of the list after only taking the sixth spot in 2021. Singapore moved to the third spot, followed by Hong Kong, which took the fourth position ahead of Geneva.

Affluent buyers are also gravitating toward Sydney. While the popular European playground of Geneva made the list in 2021, its fellow Swiss city Zurich joined the top 10 this time around. Combined with Paris, London, and Munich, that makes for five European cities across the list.

T OP 10 NON-U.S. MARK ETS FOR SECOND AR Y- HOME OWNERS

Beijing, China

London, UK

Singapore

Hong Kong, China

Geneva, Switzerland

Paris, France

Sydney, Australia

Munich, Germany

Toronto, Canada

Zurich, Switzerland

16,418

14,827

14,320

10,131

9,678

*Number of individuals with a net worth of $5 million+. Ranking excludes U.S. markets

Source: Wealth-X, an Altrata company

RANKING CHANGES FOR SECOND ARY - HO ME OW N ERSHIP

*For individuals with a net worth of $5 million+. Ranking excludes U.S. markets.

Source: Wealth-X, an Altrata company

Top Trends Driving Global HNW

SECONDARY-HOME OWNERSHIP IN 2023

The list of top secondary-home spots has changed quite a bit over just a one-year period. There are many factors driving this evolution, but we zeroed in on three big ones that appear to be most influential in affluent consumers’ decisions.

1. INCREASED TRAVEL AND THE GROWING POPULARITY OF SECOND CITIZENSHIPS

As distance continues to grow from the early days of the pandemic, more consumers are willing to travel – and, in this case, buy properties abroad. Part of this is due to easing COVID-19 restrictions and reopening borders (hence the increased activity in Asia this past year), and part is due to economic and political factors.

Just look at the number of wealthy Americans applying for second passports. As Business Insider put it, “The number of wealthy Americans applying for citizenship or residency in foreign countries has skyrocketed over the past three years as U.S. billionaires, tech entrepreneurs, and celebrities look to create a plan B for their families.”12 One firm that guides HNW investors through passport processes says it has seen a 300% jump in interest from Americans alone.

For those that choose this approach, many are opting for places very different from their home countries – like Switzerland, which is widely known for its strong education and healthcare systems – or international urban centers, where business, culture, and amenities converge.

2. THE INFLUENCE OF TAXES

Taxation is clearly top of mind for HNW individuals, too. Take Paris and Toronto, which both increased taxes on secondary homes and foreign home purchases in recent years. (Toronto’s tax on foreign nationals is now 25%!)13 As a result, both cities slipped in our rankings for HNW secondary-home owners.

Switzerland, on the other hand, is well-known for its favorable tax policies – particularly for the wealthy. Mortgage loans in the country are even tax-deductible. This might explain why two Swiss cities made this list this year. After all, at a time when inflation and consumer prices are rising, every dollar counts.

Back in the U.S., Los Angeles has a mansion tax set to take effect in April. It will be interesting to see how that influences HNW purchases there later in the year.

3. THE CHINA EFFECT

China has the second-most UHNW individuals in the world and 10% of all millionaires, per Credit Suisse.14 These consumers tend to gravitate to neighboring Asian regions when buying real estate – a probable explanation for the rise in secondary home purchases in Singapore and Hong Kong over the last year.

According to Forbes, mainland China buyers accounted for 42% of all condos sold to overseas buyers in Singapore between January and August 2022. 15

Experts predict even more activity in the coming months as China lifts its Hong Kong border restrictions. In January 2023, Chinese borrowers represented more than 11% of all mortgage requests in Hong Kong. 16