The rich aren't just buying penthouses for the luxury. U.S. millionaires say real estate is the top alternative asset to own this year according to Morgan Stanley.
The investment bank released a survey on Friday showing that 77 percent of investors with at least $1 million in assets owned real estate, according to Bloomberg.
Direct ownership of real estate was the number one alternative choice for 2014 and real estate investment trusts was the second most popular, according to the survey.
Bloomberg laid out the reasons for the choices pretty clearly, but in a sentence, the real estate market in rebounding. Fixed-income yields are historically low and equities are surging. Commercial property values in the U.S. rose 8 percent in the 12 months leading up to Jan. 31 and are 71 percent higher than the post recession bottom in 2009, research firm Green Street Advisors Inc. reported Friday.
"After a year where the Standard & Poor's Index rose 30 percent, some millionaires are moving money out of traditional, long-only strategies to find outperformance, and turning toward alternatives such as real estate and private equity," Gary Kaminsky, a vice chairman at Morgan Stanley Wealth Management in New York, told Bloomberg. "Sophisticated, high-net-worth investors are much more concerned about losses."
Will Ade, a Tiger 21 member, told Bloomberg that real estate is a particularly attractive investment as stocks show vulnerability in 2014.
There is also some sense of urgency to get into the real estate game, according to Ade, who is a geologist that made his money finding oil companies and private investors to fund the drilling of wells.
This year may be the tail-end of attractive investments in property before interest rates rise, he said. Ade is trying to purchase residential real estate in Miami right now.
Wealthy foreigners are also buying up high-rise properties in New York City. The interest in pricey U.S. properties stems from their safety because they're denominated in dollars, the world's reserve currency, Mitchell Roschelle, real estate advisory leader at PricewaterhouseCoopers LLP, told Bloomberg.
The third most sought after alternative investment this year are collectibles. According to Bloomberg, 20 percent of millionaires said they planned to buy them, followed by private equity at 19 percent and precious metals at 16 percent.
