A new report from property group Knight Frank reveals how the world’s ultra-wealthy individuals invested their money in 2017, with one asset class in particular making big strides over the past 12 months.
As many as 21% of wealth advisers and private bankers surveyed by Knight Frank said their clients exposure to cryptocurrencies like Bitcoin had increased in 2017, seemingly catching long serving investment haven, gold.
Last year saw cryptocurrencies go mainstream, rising more than 1200% in value during the year, led by Bitcoin in terms of market capitalisation. The digital currency reached a high of $19,343 in late 2017, but has since dropped to half that number – at $9,810 in trade on Monday.
The report showed that the ultra-rich still opted for equities and property over the past year.
“Appetite for real estate continues to increase globally, as investors grapple with the global low-yield, low-return environment and show signs of shifting allocations away from some fund types such as hedge funds.
“In addition, there are worries around perceptions of stretched valuations across many publicly traded bonds, while record-breaking equity markets are making some nervous. As a result, money is moving towards alternative investments, with real estate a prime target for a large proportion of this capital because of its relatively high yield,” Knight Frank said.
It added that underlying all these drivers are commercial real estate’s fundamentally attractive attributes: a relatively stable return profile with opportunities for improvement; potential for capital value growth; and the opportunity to diversify from existing assets or geographies.
The report also questioned wealth advisers and private bankers on how their client’s exposure to the major investment vehicles had changed over the past 12 months. In Africa and Latin America, cryptocurrencies drew the greatest change, especially as it compared to gold.
Looking specifically at blockchain – the digital ledger in which transactions made in Bitcoin and other cryptocurrencies are recorded – Knight Frank found that although more of the world’s wealthy were climbing into digital currencies, a significant number had likely never even heard of it.
Answering the question: “I doubt many of my clients have heard of blockchain”, the global average was 36%, with the highest recorded in Africa (51%), followed by 44% in Asia.
When asked whether blockchain was already having a tangible impact on their clients’ investment portfolio, the vast majority of respondents answered in the negative – with a 4% global average, propped up by respondents in North America (8%).