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Spotlight on wealth

By Lesley Stones

We all like to think we are one in a million, but perhaps we are setting our sights too low. How about being one in a billion, or even better, one with a billion. I'm talking about US dollars, of course.

Last year 53 more people achieved billionaire status, according to The Wealth Report by Knight Frank, giving the world a super-wealthy total of 1 844. Next on the affluence scale came 38 280 people holding more than US$100 million in assets each, and below them were 172 850 ultra high-net-worth individuals (UHNWI), worth US$30 million or more. Last year, around 15 people a day joined their ranks, a group which together held some US$20.8 trillion.

If you are not among this number yet, your time may come, since this global elite is forecast to climb 34% to almost 231 000 in the next decade.

The wealth pool gets very sizeable indeed once you include those who merely rank as high-net-worth individuals (HNWI) with US$1 million or more.

The Knight Frank report, along with other research into the world’s wealthiest such as the Capgemini World Wealth Report, makes for fascinating reading; a high-class version of the voyeuristic tendencies of gossip magazines. Who are these people, where do they live, and what do they do with their impossibly vast loot?

Sadly this isn’t an area in which Africa is rising as yet, since the extraordinarily rich still tend to be found in the old money hubs such as London and New York. But Africa’s day is coming. Last year, Zambia grew its UHNWIs by 7%, Namibia by 6%, and Nigeria and Uganda by 5% each. Africa’s 1 932 super-rich already hold US$0.2 trillion, and their number is tipped to grow by 59% in the next decade. Leading the field will be Ivory Coast, where the ultra-rich are expected to rocket by 119%.

Other wealth-creation hotspots include Vietnam, with a predicted growth of 159% in the coming decade, and Kazakhstan with 114%. Nigeria comes close with 90% forecast growth in UHNWIs. Africa is, however, regarded by many experts as having the highest potential for growth of any region currently. The continent also boasts strong entrepreneurialism, driving the potential for wealth accumulation.

A global outlook

No matter what their nationality, many wealthy people have moved at least part of their substantial assets overseas. Globally, the very rich tend to hold 20%-30% of their wealth in other countries - a figure that is kept down by a contented American and Australian contingent who are happy to keep their wealth at home.

Italian HNWIs hold a combined 38.2% of their wealth abroad, chiefly in the United States, according to data from market research firm Reportstack. Spanish HNWIs also want to spread their risks and hold 39.5% of their wealth abroad.

One of the most revealing questions asks about plans to permanently change their country of residence. Only 4% of UHNWIs in Australia and New Zealand are considering that, while emigration is a desirable option for a third of rich Russians.

Just 11% of the African elite is considering relocating, and a multiple choice question saw 93% cite security fears, 86% political risks, 74% seeking a better lifestyle and 71% wanting a better education for their kids.

Tellingly, crime and politics were barely an issue for the rich in most other regions, who focused instead on the rather mundane issue of tax as the main reason why they may consider relocating.

Where they invest

So once you have all that money, what do you do with it?

Property remains the cornerstone of most investment portfolios, which is fitting since property and construction are the main source of wealth for 18% of HNWIs in the United Kingdom, ahead of financial services (15%), retail (10%) and media (9%). A full 100% of Africans covered by the Knight Frank research were also keen to invest in property, with 39% looking abroad and 61% seeking to invest in their own country.

Equities are another popular investment, while cash, fixed income bonds and gold are likely to see a declining demand this year.

Investments of passion remain firmly on the radar for 61% of UHNWIs. Art is the luxury asset attracting the most interest, followed by watches, wine and classic cars.

The younger generation, meanwhile, tends to enjoy spending on luxury items far more than older generations. And since many of Africa’s super rich are also nouveau riche, it’s the Africans who seem to enjoy spending their booty the most.

Fabulously Wealthy Facts

  • Over the next 10 years the number of ultra high-net-worth individuals around the world is forecast to rise by 34%. Growth will be strongest in developing regions, with Africa's ultra-wealthy rising by 59%.
  • For shoulder-to-shoulder wealth, Monaco tops the density list with 574 per 100 000 people, followed by Luxemburg with 113, Singapore with 60 and Switzerland with 54.
  • Just over a quarter of the world's super wealthy are considering purchasing another house in 2015 to add to the average of three they already own.
  • The top 10 most important cities for the super-rich are London, New York, Hong Kong, Singapore, Shanghai, Miami, Paris, Dubai, Beijing and Zurich. Johannesburg comes in at number 28 and Cape Town at 36.

Source: Knight Frank's Wealth Report

 
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