World's Super Wealthy Population Declines 3 Percent, Real Estate Still Key Holding
According to global consultant Knight Frank's latest Wealth Report, high-end real estate markets across the globe are now feeling the impact of a less-wealthy world in 2015.
Based on the views of the world's leading private bankers and wealth advisors, Knight Frank's new report sheds light on the outlook for the world's ultra-high-net-worth Individuals (UHNWIs) - those with $30m in assets or more. The majority of respondents (56%) singled out succession and inheritance issues as a major risk to wealth creation and preservation over the next 10 years. The state of the global economy (47%) and wealth taxes (50%) were also recognized as key concerns for the next decade. When asked about the split of their clients' investments, respondents revealed that residential real estate accounted for a quarter of the average UHNWI's investable wealth, while commercial property made up 11%.
Andrew Shirley, The Wealth Report Editor says, "The results of this year's Attitudes Survey highlight how important the next decade will be for UHNWIs and their advisors. "Wealth creation is expected to slow, which, combined with an uncertain economic outlook around the world, will require new investment and wealth management strategies. "However, judging by the sentiment of the survey's respondents, property will remain an important part of UHNWI investment portfolios. "An increasing commitment to philanthropy and the growing involvement of women and the next generation in managing UHNW family wealth is an exciting and challenging development for those advisors who can adapt to the changing attitudes and aspirations of their clients."Key Global Wealth Trends in 2015:
- The number of Ultra-High-Net-Worth Individuals (UHNWIs) - those with $30m or more in net assets - declined by 3% last year (2015). There are now around 187,500 UHNWIs around the world, down from 193,100 in 2014.
- London has beaten New York for the second year in a row as the most important city for the ultra-wealthy, according to Knight Frank's Wealth Report, an annual analysis of wealth flows and property investment around the world. The Global Cities Survey looks at the most important cities globally in terms of where the world's wealthy live, invest, educate their children, grow their business and spend leisure time.
- The value of the world's leading prime residential property markets rose on average by 1.8% in 2015. This was similar to the 2% overall growth seen in the previous year. However, in 2015 66% of the PIRI 100 locations recorded flat or positive price growth compared to 62% in 2014.
- Prime residential property prices in Vancouver rose by 25% in 2015 according to Knight Frank's Prime International Residential Index (PIRI). Of the 100 markets analyzed as part of Knight Frank's Wealth Report 2016, Vancouver's growth outpaced other markets by some margin. A lack of supply, coupled with foreign demand, spurred on by a weaker Canadian dollar, explains Vancouver's outstanding performance.
- Succession and inheritance issues, wealth taxes and the global economy have been identified as the key concerns of the world's wealthy.
- China has seen an increase in outward investment by almost 1,500% in a decade (2005 - 2015) according to the Knight Frank Wealth Report, 2016. The surge, fueled by a number of key economic and policy factors reflects the growth from the wider Asian region with outward investment increasing in Indonesia (2569%), Thailand (1054%) and South Korea (600%).
- The value of the Knight Frank Luxury Investment Index (KFLII) rose by 7% during 2015, according to data from the latest edition of The Wealth Report. The increase compares with a 5% drop in the value of the FTSE 100 equities index and a rise of only 1% for the top end of the London residential market over the same period.
- Classic cars (+17%) were again the top annual performer in the index, which tracks the price growth of 10 luxury investment sectors. Coins (+13%) were the only other luxury asset class to record double-digit growth, while furniture continued to perform poorly sitting in last place (-6%).
- The Pacific has been named as the stand out region in a new index tracking the luxury spending trends of Ultra-High-Net-Worth Individuals (UHNWIs) - those with $30m in assets or more - created exclusively for The Wealth Report by wealth intelligence specialist Wealth-X.
Marc Cohen, regional managing director EMEA at Wealth-X also commented, "After years of considerable growth in the number of wealthy around the world, we are entering a period of deceleration as China's economy slows and commodity-exporting, emerging economies are hit by lower prices and demand. The number of newly wealthy will slow, and UHNWIs will find it harder to grow their wealth. "At the same time, the recent boom in wealth has heightened scrutiny on this group, not least as regards to tax. And with low interest rates around the world, and increasing life expectancy, retirement has become much more costly, increasing the challenge for UHNWIs to maintain and pass on wealth. "In spite of these issues, philanthropy amongst the ultra-wealthy is at an all-time high and continues to grow. The ultra-wealthy are also increasing their asset allocation to passion investments such as fine art, and second homes overseas, enabling them to enjoy their wealth."