The Collins English Dictionary dubbed 2022 as the year of the “Permacrisis,” defined as an “extended period of instability and insecurity.”
And, looking back — it seems to be a fitting word as while the U.S. emerged from the Covid-19 crisis, the pandemic ended a period of relative stability and cheap credit, says Knight Frank’s 2022 Wealth Report.
Though according to Knight Frank's Attitudes Survey, four in ten “ultra-high-net-worth individuals” who grew wealth last year cited real estate as one of the key drivers of their performance.
While the Covid-19 pandemic and subsequent geopolitical and economic shocks rocked traditional blended portfolios, real estate investments stood out as a safe haven for investors seeking to grow their wealth.
The strength of the real estate market — while turbulent as of late — is evident in the annual price growth in prime global residential markets, which is expected to hit 5% for 2022, according to Knight Frank's November forecast.
Additionally, the MSCI All Property Index, which measures commercial property performance, was 7% higher in September 2022 compared to the end of 2021, suggesting investors who had exposure to real estate were able to weather the storm of 2022 and even come out ahead.
Real estate has long been a popular investment vehicle for the wealthy. Unlike traditional stock and bond investments, which can be subject to the volatility of global markets, real estate is a tangible asset that provides a steady stream of income and can appreciate in value over time.
And, new companies have made it possible for the individual investor to capture the upside in the real estate market with an entry fee of as little as $100 — or even access to large-scale commercial projects for investors with at least $25,000 to invest.
In addition to real estate, ultra-high-net-worth individuals who saw their wealth grow in 2022 cited currency trades, market timing, and, for the first time in over a decade, the return on cash as key drivers of their performance.
On the other hand, those who saw their wealth decline in 2022 attributed the losses to equity markets, financial markets more broadly, and interest rate moves.
The traditional diversified portfolio offered little safety amid the unprecedented challenges of the year, and many investors were left reeling from the market shocks.
Knight Frank said it will issue the magnitude of wealth shifts through a tracker of asset performance in the March edition of the Wealth Report and examine the full 2022 property performance in the same issue.
Looking for a way to boost returns? Benzinga’s Real Estate Offering Screener has the latest private market investments, with offerings available for both accredited and non-accredited investors.
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