The Knight Frank City Wealth Index identifies the cities that matter to the wealthy, now and in the future. Liam Bailey shares the latest results
Wealthy investors help to drive demand for property across global markets. The decision where to purchase is driven by a range of factors, but familiarity and knowledge is a tangible pull factor when it comes to city locations, as is an understanding of market and economic dynamics.
This year we have built on our City Wealth Index, which was introduced in last year’s report, extending our analysis to provide the most rounded picture of the cities that matter to the world’s wealthy. Our assessment covers a broad canvas, including where the wealthy live, spend and invest, and where they enjoy their downtime and educate their children.
The Index is built around four themes, each covering a range of critical measures:
Wealth – We have considered current and future populations of wealthy residents. Our analysis looks at both HNWI and UHNWI populations and – crucially – at the expected rate of growth in wealth creation at city level.
Investment – To understand where the wealthy are investing, we looked at data on major property investments – those worth the equivalent of US$10 million or more – across both commercial and residential markets. We only considered investments made by private individuals or family offices. Our ranking takes into account the volume of investment, and its diversity in terms of the number of different nationalities investing.
Lifestyle – We have included a broad range of items under our lifestyle theme, including density of luxury hotels and the number and quality of leading restaurants, as well as average visitor spend. Education, a significant driver for purchases of first and second homes globally, has been accounted for by considering the number and quality of universities in each city.
Future – Future economic performance will influence and shape investment decisions. To understand how cities are likely to fare over the medium term, we have considered predicted GDP, and city-level innovation.
New York sweeps the board, coming out on top for every ranking. London takes second place overall and is also runner-up in the investment and future rankings. San Francisco takes third place overall, but scores the second most desirable lifestyle. Overall, North American cities dominate, taking ten of the top 20 spots,with Asian cities occupying a further five.
New York is a dominant centre for HNWIs (based on households earning more than US$250,000 annually), with almost double the population of Los Angeles in second place. The top nine places all go to North American cities, with London filling the tenth spot. Over the next five years this is expected to change,with Jakarta and Cairo seeing the biggest increase in this bracket, followed by New York, Los Angeles and Delhi.
While New York leads in terms of the largest annual average private investment into property over the two-year period to the end of 2017, London takes top slot for diversity of demand, measured by the number of different nationalities making investments. European centres compete closely with North American hubs on this measure, with Sydney leading the pack in Asia.
In terms of future GDP, measured in constantprices, New York again comes out on top, followed closely by Tokyo and London. Looking to the future, North American cities look set to retain their supremacy, accounting for four of the top ten cities for future GDP.
London is top of the hotel rankings, with 75 five-star hotels as listed on reservations website Five Star Alliance, comfortably topping Dubai’s 61. Dubai’s overnight visitors were the biggest spenders, with a total expenditure of US$28.5 billion. New York was in second place, with visitors notching up a US$17 billion spend. In terms of average overnight visitor spend, Melbourne was on top with an average of US$1,925 per person, followed closely by Dubai at US$1,917
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