The Wealth Report 2012

[shuggy]

Not sure if this has been posted but Frank Knight's 2012 Wealth Report can be downloaded from here:
Wealth-Report-2012

Top 10 international property investment hotspots:

» Commercial real estate Asia
» Development land Zambia
» Secondary UK residential investments
» Commercial property Poland
» Distribution and industrials UAE
» Luxury New Homes in Prime European Cities
» Education real estate Asia
» Residential Development Eastern Mumbai
» Distressed US Real estate and property debt
» Commercial property Sao Paulao

OMG cat

 

[china]

Not sure if this has been posted but Frank Knight's 2012 Wealth Report can be downloaded from here:
Wealth-Report-2012

Top 10 international property investment hotspots:

» Commercial real estate Asia
» Development land Zambia
» Secondary UK residential investments
» Commercial property Poland
» Distribution and industrials UAE
» Luxury New Homes in Prime European Cities
» Education real estate Asia
» Residential Development Eastern Mumbai
» Distressed US Real estate and property debt
» Commercial property Sao Paulao

OMG cat

So aussie residential real estate is not up there?

 

[Rolf Latham]

So aussie residential real estate is not up there?

on a world basis likely not

bit tough to buy normalish resi for a non resident.

BUT, seems we are selling off lots of large chunk farm and grazing land ..........

ta
rolf

 

[Graemsay]

What strikes me about the bits of the report that I've seen is that it's very reactive. There's a video on YouTube that contains a number of talking heads from Knight Frank, and most seem to recommend prime London as the investment of choice.

I've got a theory that what are perceived safe havens, be it gold, Gilts, Bunds or Treasuries are being bid up to a level where their prices don't necessarily reflect any intrinsic value. I'd include the top end of the London property market in this, and something is wrong when investment bankers are priced out of their traditional haunts.

Then again, Knight Frank have a strong presence in London, so they're probably talking their own book.

My other thought was that with increasing income inequality, investing in the top end of the market would make sense. This chart (from Wikipedia) shows the growth in earnings for the various quintiles in the US between 1979 and 2005.

Assuming we don't see a return to a more equal society, and you subscribe to the theory that property prices track earnings, then buying fewer, prestige properties would give a better return than the sort of places that Nathan targets.

 

[china]

What strikes me about the bits of the report that I've seen is that it's very reactive. There's a video on YouTube that contains a number of talking heads from Knight Frank, and most seem to recommend prime London as the investment of choice.

I've got a theory that what are perceived safe havens, be it gold, Gilts, Bunds or Treasuries are being bid up to a level where their prices don't necessarily reflect any intrinsic value. I'd include the top end of the London property market in this, and something is wrong when investment bankers are priced out of their traditional haunts.

Then again, Knight Frank have a strong presence in London, so they're probably talking their own book.

My other thought was that with increasing income inequality, investing in the top end of the market would make sense. This chart (from Wikipedia) shows the growth in earnings for the various quintiles in the US between 1979 and 2005.

Assuming we don't see a return to a more equal society, and you subscribe to the theory that property prices track earnings, then buying fewer, prestige properties would give a better return than the sort of places that Nathan targets.

Yes, blue chip, top end, hard to replace prime properties.

 

[Graemsay]

What I'm wondering is whether we're in the midst of a prolonged period of rising inequality, or we'll see the income gap close.

If the rich continue to get richer then I'd expect places like Toorak and Point Piper to rise at a faster rate than more typical suburbs. But if we see the top 1% slipping backwards, and that was the case for the middle part of the last century, then they'd be bad buys.

Of course, my theory is completely torpedoed by falls in Australian property prices being more pronounced at the top end. Ah well...

 

[shuggy]

Graemsay, I think it's likely the rich will continue to get richer which means high end properties will make good havens for storing wealth long term. The 63,000 people on earth worth more than US$100m who pay more than $20m for a house don't hurt like us regular guys when there's a downturn. I notice this table lists Sydney ranked 64 with a drop of -9% but i don't think there's many "homes" in Oz available for more than $20m so the seriously rich would probably be buying elsewhere.

Luxury-house-price-growth-polarized-around-the-world

Jeez, some of these guys have got more money than cents... New York penthouse sets a record for $100m:

new-york-penthouse-record-price

 

[Graemsay]

Shuggy, I'm a bit in two minds about income growth of the top 1% versus the rest.

Looking at this graph, based on income share in the US, it's possible that the middle of the twentieth century was an aberration, and we're back to a business-as-usual scenario.

But I think that even if current levels of equality are going to be the new norm, there much not be much scope for the rich to get further away from the rest of us.

The biggest risk to the 1% (or 0.1% or 0.01%) is probably political. The Shareholder Spring has attacked boards over excessive executive pay, and in the UK there are moves to clamp down on legal methods of tax avoidance. With most of the wealthy being employees rather than entrepreneurs, these moves could shake things up.

I'd agree about the super rich being on a different planet. In the US there's a massive gap between the top 1% and the top 0.1%. This has led many who would be considered wealthy (earning $300K to $400K) to feel relatively impoverished, because things like private education or top end housing is priced accordingly.

I've noticed the differences between superprime Sydney and London property prices too. The median price in London is somewhere around $500K, about the same as Melbourne, at current exchange rates, but the good neighbourhoods can make their counterparts in Sydney look cheap.

 

[Aaron Sice]

funny how most wealth has been grown since the abolishment of the gold standard.

makes you wonder just how much of it is real, and if we're actually headed into another century of cycle.

 

[shuggy]

Nice graph Graemsay. I think it's back to business-as-usual for these guys on another planet but hopefully political pressure reigns them in with legislation if their social consciousness doesn't.

I'm all for capitalism and think it works but some of these guys need a reality check.. like this guy building America's biggest house at 90,000 sq ft (8,360m2) with 9 kitchens, 30 bathrooms and 2 cinemas:

timeshare-tycoon-and-former-beauty-queen-build-uss-largest-home

This guy who spent $1 billion building a 27 story house with 3 helipads, it's own traffic control and staff of 600 needs to give his head a wobble:

indias-richest-man-builds-worlds-first-billiondollar-home

 

[BayView]

I'm all for capitalism and think it works but some of these guys need a reality check.. like this guy building America's biggest house at 90,000 sq ft (8,360m2) with 9 kitchens, 30 bathrooms and 2 cinemas:

timeshare-tycoon-and-former-beauty-queen-build-uss-largest-home

This guy who spent $1 billion building a 27 story house with 3 helipads, it's own traffic control and staff of 600 needs to give his head a wobble:

She's quite good, but not worth a house that big.

Is that a Bridgestone or a Yokahama he has hidden under his shirt around his stomach?

 

[Ausprop]

Is that a Bridgestone or a Yokahama he has hidden under his shirt around his stomach?

hard to see past the disgusting chair and mirror. gross.

 

[BayView]

hard to see past the disgusting chair and mirror. gross.

Quick analysis....spare tyre around the gut, he's 100 years old (she's not), the house is worth a small Country GDP.....

Yep; she's a gold digger.

 

[china]

Quick analysis....spare tyre around the gut, he's 100 years old (she's not), the house is worth a small Country GDP.....

Yep; she's a gold digger.

How much does a gold digger cost? According to the article, the man is 30 years older than his wife. I think the busty blonde 30 years younger is probably his most prized possession but arguably the most expensive. But no other possession conveys wealth, power and status better than a hot young wife.

 

[BayView]

How much does a gold digger cost? According to the article, the man is 30 years older than his wife. I think the busty blonde 30 years younger is probably his most prized possession but arguably the most expensive. But no other possession conveys wealth, power and status better than a hot young wife.

Good question.

Put it this way; if he was the same guy, but a pensioner renting in Blacktown, would he have her as a wife?

A gold digger costs somewhere between the renter and this guy...

On the scale of 1 to 10;

1. Same guy as renting Pensioner

5. Suburban professional on $200k per year.

10. This guy

probably closer to the rich guy with the spare tyre - I reckon you'd have to be about an 8 or above to be on the gold digger menu...maybe a 7 if you can still look as good as Hugh Hefner at 70.

 

[china]

Good question.

Put it this way; if he was the same guy, but a pensioner renting in Blacktown, would he have her as a wife?

A gold digger costs somewhere between the renter and this guy...

On the scale of 1 to 10;

1. Same guy as renting Pensioner

5. Suburban professional on $200k per year.

10. This guy

probably closer to the rich guy with the spare tyre - I reckon you'd have to be about an 8 or above to be on the gold digger menu...maybe a 7 if you can still look as good as Hugh Hefner at 70.

So if I interpret you right, you may need to net at least 1 mil a year to obtain an attractive gold digger. Conversely, the renting pensioner subsisting in Blacktown may be alone or with some fugly. I guess there is a price for everything these days but generally, the more attractive the partner, the more costly it is - like hyundai versus lambo.

 

[shuggy]

But no other possession conveys wealth, power and status better than a hot young wife.

Agree that a hot young wife is the ultimate status symbol to show others you're wealthy. Nothing costs more to maintain or turns more heads than a beautiful girl. Assets like these are way ahead of the usual things like red Ferrari's used by ordinary millionaires to show off their wealth. If your wife isn't hot it means you're not loaded.

 

[china]

Agree that a hot young wife is the ultimate status symbol to show others you're wealthy. Nothing costs more to maintain or turns more heads than a beautiful girl. Assets like these are way ahead of the usual things like red Ferrari's used by ordinary millionaires to show off their wealth. If your wife isn't hot it means you're not loaded.

Yes, the key criteria of showing wealth is that the hot wife must be at least ten plus years younger than you. In fact the greater the age disparity, the more status you have. Think Rupert Murdoch, Jim Clark(Kristy Hinze), Hugh Hefner and Donald Trump. I think that once this has been achieved, you can say that you have achieved financial independence and success. However, unfortunately, this scenario only applies to the elite 0.0001% of the population.

 

[Melbournian]

depends on your definition of hot - if it only applies to looks that you don't need to be a millionaire to get a hot girl (many aussies travel overseas to russia, thai or china) to get brides. Many are unattractive but have some coin to support these women for an aussie lifestyle as oppose for them to live in poverty overseas.

if it meant a university education, looks, proper job etc - that yes that factors would be different and having more finance would account for this.

 

[china]

depends on your definition of hot - if it only applies to looks that you don't need to be a millionaire to get a hot girl (many aussies travel overseas to russia, thai or china) to get brides. Many are unattractive but have some coin to support these women for an aussie lifestyle as oppose for them to live in poverty overseas.

if it meant a university education, looks, proper job etc - that yes that factors would be different and having more finance would account for this.

On this planet, a hot female is generally defined as young, white and English/European language speaker. Most large companies use white models, actresses to spearhead their ad campaigns, rarely blacks or asians. Five dollar Thai brides are not considered status symbols - more likely reflects a sad, lonely old white man preying on international impoverishment. Hugh Hefner, Don Trump do not parade Thai partners.