Continued international growth
Trends in the movement of wealth throughout the world are constantly changing. We look below at some of the highlights of recent reports from Knight Frank, the international property consultants, and the Hurun Report, which is Asia's foremost guide to wealth in the region.
The Knight Frank Wealth Report 2014, which drew on their extensive international expertise, illustrates the resilience of the major international centres, the continuing strength of Asia and the return of areas hit hardest by the economic downturn of the last few years. Overall the research shows Ultra High Net Worth Individuals (UHNWI) and their advisors to be optimistic with 75% reporting an increase in wealth in the course of 2013 and are largely optimistic when looking forward to the coming year, though the levels of optimism vary between regions.
The fastest growth in wealth in the next 10 years is expected to come from Africa, closely followed by Asia and Latin America, comfortably ahead of the developed economies of Europe and North America. The increase in billionaires to 2023 being most pronounced in Indonesia with a projected increase of 143% followed by India and China with a 98% and 80% increase respectively, though the country with greatest number of billionaires is expected to remain the USA.
The Hurun Report on the global ranking of US dollar billionaires confirms that 2013 was a record year for billionaires with 482 joining the ranks of billionaires, increasing the global total to 1,867. Of that total over half increased their wealth in the year, with 152 enjoying an increase of over 50%.
The list of wealthiest cities contains few surprises, with London and New York leading the way and they are anticipated to remain in that position for the foreseeable future. While London remains the leading city there is very little to separate it from New York, with UHNWI’s currently preferring London, New York might edge ahead as a more popular destination for UHNWI from China and Russia. The Hurun Report notes that for billionaires New York overtook Moscow as the billionaire capital of the world followed by Hong Kong, Beijing with London in fifth place.
15% of UHNWI’s looking to relocate
To attract this wealth countries are offering relaxed immigration procedures for investors with the requirement to spend limited time resident in the country. The UK and Switzerland are popular destinations for Russians and Chinese investors as well as elsewhere in Europe with Spain, Portugal and Malta offering investor visas.
It seem likely that the trend of UHNWI’s changing their domicile will continue with a global average of 15% looking to move in the near future, with up to 37% UHNWI’s from Russian and the CIS considering changing domicile against only 6% of those in Australasia. It is understood that 60% of Chinese entrepreneurs are planning to emigrate – to the US principally, but also to China, Malta and the UK. Further, more UHNWI’s are sending their children abroad to study, with the UK proving popular and 57% of those in the Middle East sending their children abroad to university.
For medical treatment, the Chinese often look outside of China, unusually to the hospitals and clinics of Europe and North America.
As China and India continue to produce increasing numbers of billionaires, those billionaires are migrating from their country of origin with 99 leaving China and 15 leaving India in the last year. It appears that the US is the preferred destination of 42 of those leaving. Nonetheless, China remains home to 358 billionaires, second only to the US with 481 billionaires. These two countries together are home to almost half of all billionaires. Following some way behind are Russia, UK and India all of which saw their population of billionaires increase over the last year.
Despite the net increase in billionaires resident in these countries they all saw some billionaires leave over the same period. India recorded the greatest loss, as noted above, followed by the US with 13 leaving, some for tax reasons, followed by Russia, Germany and the UK.
The increase in billionaires by continent is led by Asia with 216 new arrivals in 2013 to increase the total Asian billionaires to 824. Some way behind with 528 billionaires is North America though interestingly their combined wealth is greater than the total wealth of the Asian billionaires. While the number of billionaires in Africa and Oceania remains relatively small at 33 and 31 respectively the number almost doubled in the last 12 months by respectively 16 and 14 individuals.
The global movement of individuals and wealth seems likely to continue and increase in the future with increasing globalisation and the increase in wealth and influence of the currently developing nations in Asia, Latin America and in particular in Africa.
Global and regional hotspots
By 2024 Singapore is expected to increase its number of UHNWI by over 1700, the largest global expansion, but it will nonetheless loose its current third ranking in the cities table to Hong Kong. As Geneva continues to decline and Paris falls out of the top ten, Shanghai and Beijing move up, with Dubai and Miami maintaining their positions. To reflect the increasing economic development of India, Mumbai with an expected increase of 725 UHNWI, a greater increase than Sao Paulo, Shanghai and Moscow, will move into the top ten global cities.
The report also looks at regional hot spots that are expected to increase their influence on UHNWI in the future and reflect economic development and recent political changes in their respective regions. Sao Paulo is considered as the leading hotspot, and is just outside the global top ten, followed by Istanbul whose influence as a safe haven for Middle Eastern investment has steadily grown over the last few years. In the Middle East itself, Abu Dhabi is likely to close the gap on its regional neighbour Dubai. Further afield, Sydney is expected to be a popular centre for wealth in the Asia-Pacific region with wealth moving out of Asia in preference to Singapore.
Against the rise of Asia and Latin America the concentration of wealth in Europe is expected to decline outside of London, with only the industrial centre of Munich increasing its position as a centre for UHNWI. The currently established wealth centres of Paris, Geneva and Zurich are likely to be the main losers within Europe.
Over the last year the greatest increase in prices in residential property was seen in the Asia Pacific region with six of the leading ten cities being in the region, Jakarta, Auckland and Bali being the top three with a percentage annual change of up to almost 38%. Overall city properties enjoyed and increase of over 6.6% in the last year, but prices declined for holiday homes for ski and sun. To try to cool booming property markets the authorities in Hong Kong and Singapore have introduced taxes which have only slightly reduced prices, while the number of transactions have been significantly reduced. How long the restrictions will remain in place is difficult to assess but as interest rates are expected to rise, so the need for restrictions will reduce.
Property investors from China Singapore, Hong Kong Malaysia and India have invested significantly in the US, UK and Australia, with London in particular attracting high levels of residential investment.
The movement of capital reflects the desire of UHNWI’s in emerging markets to protect that wealth through investments in developed markets and through tax and inheritance planning and asset protection.
Rosemont International companies can assist clients in the choice of residence, and in structuring their assets in the best possible fashion. Offices are ideally located in Monaco and Hong Kong in the heart of the old wealth in Europe and the new wealth generators in Asia and Russia. For more information see http://www.rosemont-int.com