Have you seen any changes to the way clients are investing in luxury assets as a direct result of the COVID-19 pandemic?
During the past 18 months, we have had an increased number of discussions with our clients regarding private jets and luxury properties for obvious reasons. While private jets allow greater travel flexibility and less COVID exposure, properties can provide a central family hub. Some Asian families, with children studying in the US or Europe especially, were keen to find something that would enable the family to re-unite in times of crisis.
The private aviation sector has seen an increase in activity in the past 12 months due to the restrictions to commercial travel. How did your UHNW clients adapt their day to day lives to work around this global shift?
I have heard of the private aviation increase as well, but the truth of the matter is, the vast majority of our clients didn’t hire or purchase jets. Instead, they stayed put like everybody else. There were a few exceptions, where we hired a private plane to facilitate the difficult COVID protocol upon arrival and a few entrepreneurs made use of private planes for important business appointments, but again, these were the exception. Most of our clients adapted, retreated and worked from home.
How does JTC Private Office work with clients who are new to owning yachts or boats?
One of JTC Private Office’s core competencies and service offerings is our vast internal and external network. In the first instance, we involve our Jersey based Marine & Aviation team to take care of the required holding structure. Along with this, there are a number of conference calls to gauge the client’s knowledge, intent and interest. These are followed by either the introduction or engagement of specialist firms for arranging to charter the jet/vessel, conduct physical audits, arrange personnel or simply find the appropriate insurance cover for the asset and its crew.
Real estate has always been classed as one of the most reliable investments. In your view, is this still the case? If not, why not?
First and foremost, we have to differentiate between commercial and residential real estate. The former certainly took a hit last year, and some concerns and uncertainty remain in 2021. How far will different companies extend the “working-from-home” beyond the pandemic? Will larger firms rent less office space in future, knowing that part of their workforce will not come to the office on a daily basis anymore? Can a commercial property be converted and used in other ways, or is the splitting of larger office space into small units more sensible?
When we are talking about residential real estate, we read and hear more and more about people’s desire to own either a larger apartment or a house in the country side. Transactions decreased for a while at the height of the pandemic simply because physical meetings became difficult. However over the past few months we hear from our real estate contacts that business has been very good.
In conclusion, I still see real estate as a reliable and solid investment, but follow the “location” mantra and strike the right balance in comparison to your other investments, i.e. diversification.
When it comes to investing in real estate, how does JTC/JTC Private Office take away the administrative burden from clients?
The acquisition, holding and sale of properties, through structures owned by our clients, have been, next to investment portfolios, the largest asset class within our Private Client division. From direct property transactions and investments into REITs, to PE backed developments, we have seen it all, and we can support our clients from A to Z, with the exception of legal & tax advice.
How can a Real Estate Investment Trust (REIT) benefit an investor compared to other real estate structures?
REITs own or finance income-producing real estate across a range of property sectors, which provides diversification. Real estate companies have to meet a number of requirements to qualify as REITs, as well as having the required technical expertise, industry knowledge and network, which an individual investor may not possess. REITs can provide high dividends plus the potential for moderate, long-term capital appreciation. Furthermore, the relatively low correlation of listed REIT stock returns with the returns of other equities and fixed-income investments also makes REITs a good portfolio diversifier.
Have you seen a decline or increase in interest from clients wishing to invest in art in the last 12 months?
Art must be seen, and with the cancellation of most events in the last 18 months, we have noticed a decline in transactions. This doesn’t translate into a lack of interest, but more a lack of opportunities, since many art lovers are reluctant to bid or buy at virtual auctions or from galleries without seeing the piece of art.
For established family offices, what is the motivation to invest in art?
I think affinity, passion and knowledge is a precondition to invest in art and the real motivator. If there isn’t any previous connection to art within the family, the Family Office is unlikely to consider art investments altogether, as it is really a different world, so one can’t just analyse it like a company or the stock market.
Is digital art investment already on the radars of HNWIs?
We haven’t come across a single digital art investment within our portfolio. It’s a novelty to some extent and misses a proven market, which allows experts to set proper pricings. Besides, true art lovers still prefer a physical piece of art as compared to a “screen shot”, which just doesn’t give you the same experience. This market has to develop further before it becomes established and trusted within the wider art scene.