London and New York remain the top destinations for the world’s ultra-high net worth individuals to live and invest in but Asian cities are fast catching up, says Knight Frank’s seventh annual Wealth Report
Key Findings
- The global number of High-Net-Worth Individuals (HNWIs is defined as someone with $30 million or more in net assets) increased by almost 8,700, or 5%, in 2012
- Their number is set to increase by another 50% in the coming decade, according to forecasts prepared for Knight Frank’s Wealth Report
- Fastest growth in wealth creation will be in Asia and Latin America over the next 10 years
- London and New York are the top destinations in the world for wealthy individuals and will remain so until 2023, according Knight Frank’s survey of wealth advisors, whose 15,000 clients have assets worth US $1 trillion.
- The 2012 results of Knight Frank’s index which tracks the performance of luxury property prices across 80 global destinations shows Jakarta and Bali recorded the highest growth
- Monaco remains the most expensive location to buy prime residential property: a luxury home can range in value from $5,350 to $5,920 per square foot.
- Classic cars have enjoyed the biggest uplift in value over last 10 years (395%), measured against other key collectable assets, such as fine wine and art, inKnight Frank’s Luxury Investment Index.
The total number of super-rich individuals increased globally by 5% in 2012, pushing an extra 8,700 people into the ultra-high net worth bracket, according to the seventh edition of The Wealth Report, produced by Knight Frank, a leading global property company.
The total wealth of HNWIs – those with net assets of US $30m or more – increased by $566bn to $26 trillion, an increase of 2% year- on-year, according to data produced exclusively for Knight Frank’s Wealth Report by Wealth X, a wealth intelligence firm. Over the next ten years another 95,000 individuals are set to break the $30m barrier in terms of personal wealth, and while Asia and Latin America will see the largest growth in the number of ultra-wealthy individuals, North America will still have the highest total number of HNWIs in 2022.
Liam Bailey, Global Head of Residential Research at Knight Frank, said: “The largest concentration of wealth is currently based in the established centres of North America and Europe, but there is set to be rapid growth in Asia, Latin America and the Middle East. In the next decade we will see the biggest increase in ultra-wealthy individuals in cities such as Sao Paulo, Beijing, and Mumbai.”
“According to a survey of advisors with 15,000 ultra-wealthy clients, London and New York are still the most important destinations in the world. In ten years’ time they will still lead the way, but key Asian cities will have moved further up the list.”
The growing influence of Asian wealth creation is shown in the results of The Wealth Report’s Prime International Residential Index (PIRI) which tracks the value of luxury residential prices in 80 prime global locations in 2012. Price growth was strongest in Jakarta and Bali, with luxury property values rising by 38% and 20% respectively, boosted by a growing middle class in Indonesia.
The Chinese cities of Guangzhou and Shanghai also saw double-digit growth in the value of prime property, while the sheer weight of Chinese wealth pouring into Hong Kong resulted in an annual price increase of 8.7%, despite the Government cooling measures which limited the potential for similar increases in Beijing.
“Wealth creation has not been dented by the global economy slowing, nor has this affected the demand for prime property as the search for safe haven investments has continued,” Liam Bailey explained. “These factors will likely drive prime values higher in the short to medium term as HNWIs look to invest in tangible assets such as a prime property in the major global cities. But the results of our survey of advisers to the ultra-wealthy around the world shows that the appetite for some level of risk is returning, which in turn is opening up some property markets which have been moribund for several years.”
The super-wealthy, especially those in China, are also set to step up their interest this year in “investments of passion” such as art, fine wine, classic cars, coins and watches. Knight Frank’s Luxury Investment Index shows that classic cars have seen the largest appreciation in value over the last decade, with an average uplift in price of 395%.
The basket of collectable assets such as art, fine wine, classic cars, coins and watches within the overall luxury index has accrued cumulative gains of 175% over 10 years (with a 6% uplift in 2012 alone). The ultra-wealthy also increased their spending on philanthropic activities in 2012 compared to 2011, with the most significant increase in expenditure among those in Asia and Russia and CIS.