10 things we learnt from the Knight Frank Wealth Report

Every year — through thick, thin, good and bad — Knight Frank publishes its ‘Wealth Report’, a part-survey, part-study that explores and explains every economic twist and turn of the previous twelve months. Its digs into asset classes, dives into luxury trends and predicts what financial fads are set to grip the world throughout the year to come.

This year, there’s plenty to report on. From pandemic-hit projects to the rise of hybrid working, the property consultancy has condensed and collated the most important pieces of business and investment information into 100 insight-packed pages. Gentleman’s Journal has sifted through every single one, and found 10 of the most compelling, timely takeaways for 2022…

Perhaps the hardest-hit sector during the pandemic, the travel industry has had to evolve to survive. From new entry requirements to the staycation revolution, we’ve seen plenty of twists on traditional holidays of late. But the latest trend, according to the Knight Frank Wealth Report, will see us stretch the duration our stays. As we move into a post-pandemic world, we’ll allegedly travel less frequently; but remain on holiday for longer.

Stefan Gössling, of Lund University, also observes that almost 90% of people globally never fly to begin with — putting the majority of airport-bound holidaymakers in a global elite. “But,” Gössling adds, “even if the elite were to follow the advice of the luxury travel industry to travel less frequently and stay for longer, say, halving their flights, aviation emissions would still rise five-fold if the rest of the world were to enjoy this more “limited” freedom to fly”.

There’s been a new space race brewing for the best part of a decade; with Richard Branson first dreaming up the high-flying concept of Virgin Galactic somewhere around the turn of the millennium. Knight Frank’s Wealth Report notes the boom in ‘space tourism’, but also highlights how costly these cosmic jaunts will be; with tickets on a Virgin Galactic flight start at $450,000.

However, those with deep pockets do seem to want to explore deep space, and more private citizens flew to space last year than in the entirety of spaceflight history. But, according to Jane Poynter of Space Perspective, we’ll still have to wait a while — around 30 years — for the first ‘space hotel’ to open its doors, whether that’s on the moon or in orbit. “It costs billions of dollars to build an orbital space station and hotel,” says Poynter, “and would cost many more to construct a hotel on the Moon”.

From cryptocurrencies to NFTs, the digital marketplace has had an incredible year. Perhaps this popularity is a result of everyone sitting at home for over two years, looking for excitement and investments in cyberspace. But, whatever the reason for the rise of crypto-assets, Knight Frank’s Wealth Report tells us that according to the Attitudes Survey, 18% of ultra high net worth individuals now own some kind of cryptocurrency or token, and 11% have invested in NFTs.

Additionally, according to a report in The Economist magazine, the global value of cryptoassets was $2.4 trillion at the end of 2021, a 12-fold increase since early 2020. And, to make matters even more daunting for those yet to dabble, there are now more than 8,000 cryptocurrencies in circulation for investors to choose from.

But it’s not all about digital assets; many of the old faithful investments remain solid choices. Whether precious metals or fine art, established asset classes are still safe bets. And chief among them; alcohol. The Knight Frank Wealth Report tells us that “bottles of Scotch whisky have remained resilient” during the pandemic — but wine is still king. Champagne (+31%) and Burgundy (+25%) performed particularly well in 2021.

Vineyards are of also of great interest, with the French wine market seeing a healthy rise in exports. In the first half of 2021, France exported 7.3 million hectolitres of wine, 15% up on the first half of 2019, according to Vitisphere and David Bourla, Chief Economist for Knight Frank France.

We’ve all spent the last two years adapting to a new working life; with our spare bedrooms and kitchen tables being converted into offices. According to the insights of the Knight Frank Wealth Report, these professional shifts are set to stay in place — at least to some extent.

“We are witnessing the rising popularity of hybrid working – whereby work is undertaken in a range of settings including (but not restricted to) the office and employees’ homes,” reads the report. “Indeed, in a late 2021 survey of almost 2,000 global C-suite leaders, KPMG found that 73% anticipated hybrid working styles emerging within their business; yet only a third had actually implemented a change. Clearly, there is some road to run and hybrid working will be a consistent theme during 2022”.

Have you entered the ‘metaverse’ yet? Whether you’re an avid Oculus gamer or you’ve embarked on a hyper-real digital shopping spree, many of us have already plugged into the immersive matrix. But, according to Knight Frank, we’ll see this sector become even more outlandish and experimental as the year progresses.

“The metaverse will increasingly offer luxury brands the opportunity for innovation and trialling out new ideas or items,” points out Stephen Springham, Head of Retail Research at Knight Frank. “It opens them up to new audiences and creates a more versatile and valuable brand. In addition the metaverse offers huge opportunities to collect and analyse shopper data, which will increase brand value.” A digital Gucci bag, for instance, sold last year for 162% more than its “real-world” price.

In perhaps the least surprising insight from Knight Frank’s Wealth Report, Monaco remains the country with the highest real estate prices. In the Mediterranean bolthole, and world’s most expensive enclave, $1 million will buy prospective developers and buyers just 15 square metres of living space.

Elsewhere, the report tells us that there’s been strong price growth in Singapore — where $1 million will buy you 35 square metres. In New York City, you’ll scoop up 33.3 sq m for the same price, whereas in London you’ll get slightly less, with just 30.6 sq m. Better value per $1 million can be found in Melbourne (84.3 sq m), Madrid (105.5 sq m) and Mumbai (108.1). And, in Cape Town (220 sq m), you’ll get ten times as much space for the money compared with Hong Kong (21.3 sq m).

Another insight into the luxury travel sector; private jets have seen a huge uptick in recent years. It’s not a surprise — if people can afford to fly privately, why would they not? It’s not only a more practical, swifter option than flying commercial, but it’ll also shield you from the public, and the potential of contracting Covid-19.

It’s the same with business travel. Globally, there were 7% more business jet flights operated in 2021 than in 2019, and a 50% uptick on 2020. This contrasts starkly with scheduled passenger airline activity, which last year remained 35% below 2019 levels. Business aviation activity also hit some all-time highs in 2021 — with a spectacular rebound in business jet demand in the second half of the year.

In one of the most exciting revelations from the latest Knight Frank Wealth Report, the real estate company pulls back the curtain on ‘cities of the future’, some of the most exciting, futuristic new metropolises and conurbations planned for the coming years. Among them; Mooikloof Mega City, the world’s largest part-ownership residential property development in South Africa, and Neom, the world’s most innovative, technologically sophisticated and sustainable city in Saudi Arabia.

But our favourite of the projects? Telosa. Designed by Danish architecture studio BIG, Telosa is the vision of billionaire former-Walmart executive Marc Lore, who wants to create a new community-owned US city for 5 million people based on a reformed version of capitalism that he calls ‘equitism’. Potential sites include cheap desert areas in Nevada, Utah, Idaho, Arizona, Texas or the Appalachian Mountains — and it will cost $435 billion to build.

Like the wines and whiskies we mentioned above, some of the most solid investments are assets we’ve been buying for decades. Classic cars are revving up in appeal once again, with early supercars including the Lamborghini Countach, Bugatti EB 110, Porsche 959, Ferrari 288 GTO all good bets (as long as they’re in perfect condition and have low mileage).

Aside from motors, Rolex sports watches have showed a steep climb, as the appetite for the finest examples remains insatiable. According to a new Rolex watch report, Rolex Daytonas continue to increase in value the most overall, closely followed by Explorers and Submariners. 2021 also saw a boom in natural fancy colour diamonds. Due to a significant shortage of pink and yellow diamonds, prices have soared — rounding out the latest crop of luxury assets Knight Frank has identified as timely, worthy investments.

Want more business insight? From global trends to health sphere breakthroughs, here are 6 business predictions for 2022…

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