< Previous50 Vol. 25/11, October 2024 Investment Trends ABE_2511_50-54_Investment trends_13402534.indd 5029/09/2024 08:35arabianbusiness.com 51 Investment Trends From farmland to fine art, UAE finance experts reveal how the world’s richest are navigating economic uncertainty in 2024 WORDS BY SHARON BENJAMIN THE 2024 INVESTMENT PLAYBOOK I n a ye ar marked by global upheaval, the world’s wealthiest investors find themselves facing a financial landscape unlike any in recent history. Geopolitical tensions, technological disruption, and economic instability have left even the most seasoned investors questioning their next moves. Should they stick to the tried-and-true strategies that have served them for decades, or embrace new, unexpected asset classes? For high-net-worth individuals (HNWIs), this uncertainty doesn’t signal a halt in their investment activity. Instead, it has spurred them to diversify, moving beyond traditional assets like stocks and real estate, and exploring more niche investments that reflect both per sonal interests and forward-thinking strategies. According to UAE-based finance and wealth experts, these moves demonstrate that even in turbulent times, the world’s richest are finding creative ways to protect and grow their wealth. The year 2024, a shift to value- driven investments As global markets remain volatile, there’s a noticeable trend among wealthy investors towards assets that offer more than just financial returns. Stuart Porter, a Dubai-based wealth coach and chartered financial planner, has observed this shift first-hand. “This year, wealthy investors are increasingly drawn to assets that align with their personal values and long-term goals,” Porter explains. This growing interest in value- driven investments has seen a surge in sustainable and impact investing. “These include sustainable and impact investments, which offer both financial returns and social or environmental benefits,” says Porter. By investing in green technologies and companies that adhere to strong environmental, social, and governance (ESG) principles, investors are increasingly seeking to make their wealth work for both profit and the planet. ABE_2511_50-54_Investment trends_13402534.indd 5129/09/2024 08:3552 Vol. 25/11, October 2024 Investment Trends For the ultra-wealthy, this person- alised approach to investing goes beyond market trends. “Investment choices are highly individualised, reflecting personal preferences and strategies rather than broad trends,” Por ter adds. “Some may focus on cutting-edge technologies or innovative startups, while others might invest in traditional assets like real estate or blue-chip stocks.” The rise of farmland as a surprising asset class One of the more unexpected investment trends emerging in 2024 is farmland. As economic uncertainty fuels demand for tangible, inflation-resistant assets, other investments, such as equities, may lack. This trend towards tangible assets reflects a broader desire among the wealthy to protect their portfolios from market volatility. “Wealthy investors are increasingly seeking tangible, infla- tion-resistant assets in a cautious economic climate,” says Kaippallil. Cautious optimism, navigating risk in 2024 While farmland and sustainable invest- ments offer a sense of security, the world’s richest aren’t abandoning high- er-risk ventures entirely. However, their approach to risk in 2024 is noticeably more cautious. wealthy investors are increasingly turn- ing to land. Raji Kaippallil, a Dubai- based finance expert, notes that farm- land has become an attractive option. “One of the surprising assets that wealthy people are investing in is farm- land,” she says. This growing interest is driven by two main factors: The finite availabil- ity of land and its potential for steady, long-term appreciation. “The increas- ing demand but the limited availability provides both income as rent and appreciation in its value over the long term,” Kaippallil explains. In a world where inflation remains a constant concern, the tangible nature of farm- land offers a degree of stability that By investing in green technologies and companies that adhere to ESG principles, investors are increasingly seeking to make their wealth work for both profit and the planet ABE_2511_50-54_Investment trends_13402534.indd 5229/09/2024 08:35arabianbusiness.com 53 Investment Trends “Investors have been cautious in 2024 with lesser exposure to riskier assets, particularly crypto,” Kaippallil explains. Cryptocurrencies and NFTs, once seen as exciting new frontiers for investment, now occupy a much smaller place in the portfolios of ultra- high-net-worth individuals (UHNWIs). Por ter highlights that while some wealthy investors still maintain an interest in these digital assets, they form only a minor part of their overall strategies. “Experienced investors are cautious and typically allocate only a small percentage of their wealth to these high-risk, volatile assets,” Porter says. “They recognise the potential for significant returns but also understand the high level of risk involved.” Instead, most are balancing these speculative ventures with more stable and traditional investments. “Many prefer to balance their portfolios with equities, fixed income securities, and real estate,” adds Porter. This careful balancing act allows wealthy investors to maintain a diversified portfolio that can withstand market fluctuations while still leaving room for higher-risk opportunities. Blending profit and pleasure Beyond farmland and sustainable assets, many of the world’s richest individuals are turning to investments that reflect their personal interests. “Investments in art, luxury cars, wine, and watches have always been popular with the wealthy,” says Kaippallil. These “passion invest- ments” not only provide potential finan- cial returns but also serve as a reflection of personal taste and lifestyle. Por ter explains that for many wealthy investors, passion investments offer a unique way to diversify. “These assets not only diversify their portfolios but also reflect personal interests and tastes, providing both financial and personal satisfaction,” he says. For those with the means, investing in a rare painting or a luxury car is as much about personal enjoyment as it is about long-term financial growth. However, passion investments require specialist knowledge, and inves- tors often rely on experts to guide them. “Such investments add a unique dimen- sion to their overall wealth management strategy but require specialist knowl- edge,” Porter adds. Venture capital and private equity While many of the world’s richest are opting for safer, tangible investments in 2024, there’s still room in their portfo- lios for higher-risk, higher-reward ventures. Porter notes that venture capi- tal and private equity continue to appeal to UHNWIs who are willing to take calculated risks. “Venture capital involves investing in early-stage startups with high growth potential but also high risk,” says As economic uncertainty fuels demand for tangible, inflation-resistant assets, wealthy investors are increasingly turning to land Wealthy investors are increasingly seeking tangible, inflation- resistant assets in a cautious economic climate ABE_2511_50-54_Investment trends_13402534.indd 5329/09/2024 08:3554 Vol. 25/11, October 2024 Investment Trends Porter. For those willing to take the plunge, the rewards can be significant. However, these investments require both patience and substantial capital. “Private equity offers opportunities to invest in privately held companies, which can yield substantial returns but require patience and significant capi- tal,” Porter explains. Commodities, too, are gaining renewed interest as hedges against economic instability. Precious metals and rare minerals, in particular, are seen as safe havens during times of inflation. “These investments are typi- cally part of a diversified portfolio that balances risk and reward,” Porter says. Wealth preservation over generations At the heart of these varied investment strategies is a long-term perspective. Wealthy investors tend to focus less on short-term profits and more on preserv- ing and growing their wealth for future generations. “This long-term perspec- tive allows them to weather market vola- tility and invest in assets with sustaina- ble growth potential,” says Porter. By focusing on long-term goals, the world’s richest can take a more patient approach to investing, allowing for the ups and downs of the market while still reaping the benefits of compounding over time. “By focusing on long-ter m objectives, they can build a diver sified por tfolio that balances risk and reward, ensuring financial security and growth over an extended period,” Porter concludes. In 2024, the world’s wealthiest investors are not shying away from uncertainty but are instead embracing it with a mix of traditional and inno- vative investment strategies. From farmland to fine art, their portfolios reflect a blend of caution, personal values, and a willingness to take risks where the rewards justify it. As the global economy continues to evolve, so too will their strategies – always with an eye on the future. Private equity offers opportunities to invest in privately held companies, which can yield substantial returns but require patience and significant capital $1M A high-net-worth individual (HNWI) is a person with typically at least $1m in liquid financial assets Investments in art, luxury cars, wine, and watches have always been popular with the wealthy ABE_2511_50-54_Investment trends_13402534.indd 5429/09/2024 10:13the only app you won’t silence this season Install now56 Vol. 25/11, October 2024 Wealth Management ABE_2511_56-60_Wealthy GenZ_13377457.indd 5629/09/2024 08:50arabianbusiness.com 57 Wealth Management WORDS BY NICOLE ABIGAEL Forget stocks and bonds – the new generation of high-net-worth individuals is splashing cash on sneakers, NFTs, space travel, and everything in between hen we think of millionaires, the image that often springs to mind is one of buttoned-up individuals in tailored suits, care- fully managing their wealth through a steady stream of stocks, bonds, and real estate. Yet, the new wave of millionaires and billionaires from Gen Z is turning that perception on its head. These young trailblazers aren’t interested in following the playbook of their predecessors; they’re rewriting the rules on wealth, investments, and luxury – and they’re doing it with sneakers on their feet and crypto in their pockets. A generation defined by its rebellious spirit, Gen Z is making its mark in the financial world, and they’re doing it loudly. From investing in alter- native assets like digital art and cryptocurrencies to prioritising experiences over material possessions, these young individuals are shaking up the status quo. As Olyvia Kwok, founder of Willstone Management, an investment advisory firm, explains: “Young people are the new buying power. They’re a huge demographic, and they’ll keep spending.” But this spending isn’t limited to high-end handbags and fancy homes – it’s much more disruptive and, frankly, unpredictable. ABE_2511_56-60_Wealthy GenZ_13377457.indd 5729/09/2024 08:5058 Vol. 25/11, October 2024 Wealth Management The rise of alternative assets One of the clearest signs of this genera- tional shift is the type of assets they’re sinking their wealth into. While previous generations might have focused on the stability of blue-chip stocks, bonds, or even classical art from names like Andy Warhol and Pablo Picasso, Gen Z inves- tors have little interest in the safe bets of the past. “They don’t care if it’s $100,000. They just think it’s cool,” says Kwok, highlighting the stark difference in investment mindsets. Instead of looking at the long-term appreciation of a Warhol, today’s millionaires are drawn to what resonates with them culturally. That means digital art, NFTs (non-fun- gible tokens), and other forms of artistic A recent Bank of America survey shows that almost a third of younger millionaires’ fortunes are tied up in crypto year, the Dynasty Collection, featuring six individual Air Jordans worn by superstar Michael Jordan during his NBA championship games, sold for an eye-watering $8m at Sotheby’s. Sneak- ers have officially entered the realm of luxury investment. Adnan Jassat, founder of sneaker trad- ing platform Thriller, believes that “sneak- ers should be a minor part of everyone’s investment portfolio.” He’s not alone in that belief. Thanks to the influence of celebrities and the power of social media, the market for rare and limited-edition sneakers has exploded. Nike and Adidas have adopted a strategy of exclusivity, releasing only a select number of pairs for certain models, driving up demand and skyrocketing resale values. expression that align with their values and tech-savvy nature. Cryptocurrencies have also become a cornerstone of these portfolios, with digital assets forming a significant portion of their wealth. A recent Bank of America survey shows that almost a third of younger millionaires’ fortunes are tied up in crypto and other alterna- tive investments, compared to just six percent for older generations. Sneaker collecting It’s not just digital assets that are making waves – the sneaker market has turned into a veritable gold mine for savvy investors. For these young millionaires, sneakers are no longer just footwear; they’re valuable collectables. Earlier this ABE_2511_56-60_Wealthy GenZ_13377457.indd 5829/09/2024 08:50arabianbusiness.com 59 Wealth Management attributes,” explains Stuart Porter, a wealth coach. And it’s not just about investing in companies with these values – some young millionaires are going a step further by creating their own impact-focused funds or acting as angel investors for mission-driven startups. Disrupting real estate For all their love of alternative assets and experiences, real estate still holds appeal for this new generation of investors – but even here, they’re pushing boundaries. Gone are the days when luxury real estate meant sprawling mansions with gold-plated faucets and marble floors. Today’s young millionaires want prop- erties that reflect their tech-savvy and health-conscious lifestyles. The global streetwear market is set to rise sharply between 2024 and 2031, making sneaker flipping a lucrative side hustle – or, in some cases, a full-time job – for young investors looking to diversify their portfolios with something more exciting than a predictable stock. Experiences over things While material wealth remains impor- tant, Gen Z millionaires are increasingly prioritising experiences over posses- sions. This trend is reshaping entire industries, including travel, hospitality, and even space tourism. A McKinsey report from May 2024 revealed that the demand for luxury tourism is expected to outpace all other segments, driven primarily by a new generation of wealthy travellers, most of whom are in their 20s. What are they after? Bespoke adven- tures that money can’t buy – unless, of course, you’ve got millions to burn. Think private expeditions to remote corners of the world, exclusive cultural experiences in major cities, or even a quick jaunt to space. Space tourism, once the stuff of science fiction, has become the ultimate status symbol for these young tycoons. Companies like Blue Origin and Virgin Galactic are catering to this new market, offering trips to the edge of space at a price that makes a luxury yacht look cheap by comparison. By 2032, the space tourism market is projected to grow from its current valuation of $1.25bn to an astronomical $27.86bn. Back on Earth, the demand for tailor-made travel experiences is on the rise. These young travellers want more than a five-star hotel and a fancy dinner – they’re after authentic, socially conscious experiences that align with their values. According to the McKinsey report, companies should be ready to offer everything from sustainability-fo- cused travel options to immersive cultural excursions that can be Insta- grammed to death. Impact investing These young millionaires aren’t just throwing their money around – many are investing with a purpose. Impact investing, which allocates capital to ventures that aim to generate positive social or environmental outcomes alongside financial returns, is becoming increasingly popular. The Global Impact Investing Network estimates that assets in impact investing soared to $1.164 tril- lion in 2023, driven largely by millen- nials and Gen Z. Renewable energy, sustainable agriculture, affordable housing, and education technology are some of the most popular areas for these investor s, who are just as concerned with doing good as they are with making a profit. “They want to know if the companies they’re investing in have good environ- mental, social, and governance (ESG) Six pairs of championship Air Jordans signed and worn by Michael Jordan were sold for $8m in February (Photos from Sotheby’s) ABE_2511_56-60_Wealthy GenZ_13377457.indd 5929/09/2024 08:50Next >