Client Affairs

GUEST COMMENT: "Mid-Wealthy" Feel The Squeeze On Luxury Assets

Lisa Vizia and Philip Radford, Saffery Champness Registered Fiduciaries, October 1, 2013

articleimage

Lisa Vizia, Director, and Philip Radford, senior manager, Saffery Champness Registered Fiduciaries, Guernsey, write about the changing fortunes of luxury property assets.

 Lisa Vizia,
Director, and Philip Radford, senior manager, Saffery Champness Registered
Fiduciaries, Guernsey, write about the
changing fortunes of luxury property assets. The editors are pleased to share
this material with readers but point out that they do not necessarily endorse
all the views expressed here.

The recession has not tempered the
appetite of the uber-wealthy for “trophy assets”. But for those with mid-tier wealth
it has been a different story with lower returns and maintenance costs
continually rising. Consequently, many wealthy private clients want to convert their
high value assets to cash.

This then leads to complications for
trustees when it comes to discussing with clients the
acquisition and disposal of high value assets and how best to structure them.

Probably the most conspicuous of
the “toys” favoured by the mega-rich have traditionally been top-end super
yachts and private jets. Such assets are worth hundreds of millions and
billionaires are paying for them in cash.

When the latest large commercial
aircraft is launched onto the market the very wealthy aspire to acquire one for
private use. For example, in the last year or so, several rulers of countries
are said to have placed orders with Boeing for the new 747-800 aircraft, which
is much bigger than the previous incarnation of the 747. Such owners will use
their aircraft as some would a chauffeur-driven vehicle for their own personal
travel.

In addition, certain business
assets have moved into vogue as prestigious new possessions to own. As well as
football clubs, there is a trend towards London
hotels, typically for Middle Eastern and Russian clients. Hotels appeal because
the owner may wish to reside in the penthouse or the entire top floor with full
hotel services on tap when they visit London.
There is also the potential for the hotels to be converted into residential
properties in the future.

Register for FamilyWealthReport today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes