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Real Estate: An Investment for One in Ten Millionaires

A new survey from Spectrem Group, a Chicago-based research and consulting firm, shows that one out of ten millionaires is likely to put money into investment real estate in the next 12 months, and that 15 percent of the Ultra High Net Worth group (defined as a net worth of $5 million or more, excluding primary residence) is likely to do so.

The study, titled "Affluent Market Insights 2010," had gotten ink for its finding that the number of millionaires (again, net worth, not counting primary residence) has rebounded to 7.8 million in 2009 from 6.7 million in 2008. "These aren't necessarily new millionaires," said George Walper, Jr., president of Spectrem. The number, rather, reflects a rebound in certain investment classes, most notably equities.

For the richies, investable assets such as equities are the largest category of their net worth. Walper noted that real estate outside a millionaire's primary residence (think: a combination of vacation homes and investable real estate such as apartment buildings) tends to be 8-15 percent of his or her total net worth (excluding again the primary residence/castle).

While real estate prices appear to have bottomed months ago in some areas, they are far from peak 2006-2007 prices. That recovery, when it comes, should spawn even more millionaires, Walper said.

"As other investment categories, such as real estate (either residential or income-producing), and the value of people's private businesses, rebound, we will start to see 2006-2007-type numbers," Walper said.

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