Knight Frank Launches Wealth Report 2017

Knight Frank today launched the newest edition of The Wealth Report, which tracks the growing super-rich population in 125 cities across 89 countries.

The number of Ultra-High- Net-Worth Individuals (UHNWIs) rose by 6,340 in 2016, taking the total to 193,490, according to data provided by New World Wealth for The Wealth Report.

The increase reversed the decline of 3% seen in 2015, despite ongoing political and economic uncertainty around the world having more of an impact on future trends.

“The momentum gained in wealth creation in 2016, although relatively modest, was far from being a foregone conclusion, especially given that nearly three-quarters of respondents to our Attitudes Survey highlighted political uncertainty as a significant threat to their clients’ availability to create and preserve wealth,” Knight Frank Head of UK Residential Research Grainne Gilmore said.

Whilst a clearer economic outlook for the UK and the US will be provided in the next 12-24 months, the report noted that in Europe, the UK will remain the front-runner in terms of its ultra-wealthy population, with a forecast 30% rise in UHNWIs over the next decade.

Capital growth

The USA is expected to see a higher rate of growth in its UHNWI population in the next 10 years than many other developed countries, despite the uncertainty surrounding the new President’s policies.

New World Wealth head of research Andrew Amoils said one key influence on income in 2016 has been the performance of stock markets in dollar terms.

“In many countries this was much stronger in 2016 than in 2015. There may be widespread uncertainty, but there are also strong fundamentals in many economies, with signs of real progress being made around regulation and policy which will help economic growth to flourish in some places.”

Australia – growth in HNWIS

The latest data on HNWIs confirmed a strong and growing attraction of Australia, the US and Canada as destinations for the footloose wealthy. Sydney and Melbourne top the list of growth markets, while Perth was listed at 8th on the global list.

Knight Frank Director of Residential Research Michelle Ciesielski said the latest figures reveal that Sydney has seen an annual ‘net inflow’ (inflow vs outflow of wealth) of 4,000 HNWIs, while Melbourne and Perth have seen a net inflow of 3,000 and 1,000 HNWIs respectively.

“Sydney is at the top of the list for the highest net inflows of HNWIs globally, with the inflow representing growth of 4% of the HNWI population already based in the city.

“Melbourne comes in at second on the list globally with an annual net inflow of 3,000 HNWIs– approximately 4% of the existing Melbourne HNWI population. Perth sits at eighth on the list with a net inflow of 1,000 HNWIs.

“Australia is increasingly well-positioned for the world’s wealthy as a good place to migrate and invest due to a number of factors, including lifestyle and relative security as HNWIs seek a safe haven from political upheaval.

“Since the global financial crisis, the world’s wealthiest people have shifted their focus from the size of their returns to the safety of their capital. Given the lower global economic growth environment, and the heavy reliance on more volatile emerging markets, the personal safety of people in positions of wealth is increasingly being targeted as inequality grows,” said Ms Ciesielski.

The list of cities seeing an outflow of wealth is topped by European centres, with Paris and Rome seeing outflows of 7,000 and 5,000 HNWIs respectively in a year. London remains an outlier in Europe, maintaining an annual net inflow of 500 HNWIs. India and China are large net exporters of wealthy migrants – but with rapid domestic wealth creation, losses here are less concerning than those in Europe.

Global growth in UHNWIS

While the global population of UHNWIs is set to rise by 43% by 2026, The Wealth Report reveals considerable variation in growth rates in different regions and countries.

  • Vietnam, having seen the biggest growth in its ultra-wealth population over the last decade, is expected to see the fastest growth in it UHNWI population by 2026, with a 170% increase in people with $30m or more, taking the total to 540. The number of millionaires is predicted to jump from 14,300 to 38,500 over the same period.
  • Asia is starting to challenge the USA in terms of the largest regional population of UHNWIs. At present, Asia is home to 27,020 fewer ultra-wealthy people than the US, but by 2026, this difference will have shrunk to just 7,068.
  • Asia is also set to strongly outperform Europe in terms of the rate of growth of UHNWIs over the next 10 years, with a 91% increase predicted, compared with 12% in Europe.
  • The growth in ultra-wealthy populations in Africa and Latin America will outpace that of Europe and North America over the next decade. Hotspots for growth include Mauritius, Ethiopia, Tanzania, Uganda, Kenya, Rwanda, Mexico and Argentina.
  • Countries that offer a fiscal and political ‘safe haven’, as well as excellent quality of life, are expected to see strong growth over the next decade in UHNWI populations and saw their numbers increase in 2016. Australasia, Canada, Malta, the UAE, Qatar, Monaco and Israel are examples of key ‘safe havens’ attracting migrating UHNWIs.

“On a metro level, following growth of 12% during 2015-16, Sydney’s ultra-wealthy population is projected to increase by 70% over the next 10 years to 2,091 UHNWIs,” Ms Ciesielski said.

“This places Sydney at 18th on the global list, when ranked by forecast UHNWI population.

“Although outside the top 20 global list, Melbourne UHNWI population are also rising, with an expected 70% growth over the next decade to an estimated 900 UHNWIs– similar growth as projected for Sydney.

Knight Frank Head of Research for Asia Pacific Nicholas Holt said the data shows a very dynamic wealth landscape around the world with the Asian region taking on the leading role in terms of growth of wealthy individuals over the next 10 years.

“In percentage terms, emerging Asian markets such as Vietnam will lead the way, although the true story behind Asia catching up with North America can be found when looking at China and India – the Asian behemoths will witness the second and third largest number of additions to the ranks of UHNWIs respectively over the next decade – behind only that of the US,” he said.

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