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New World Wealth (NWW) recently published its Global Wealth Migration Review, a report that investigates worldwide wealth and wealth migration trends. As part of the report, key investment trends for HNWIs are identified.

Global Wealth Stats

  • Total private wealth held worldwide amounts to approximately US$215 trillion.
  • The average individual has net assets of US$28,400 (wealth per capita).
  • There are approximately 15.2 million HNWIs in the world, each with net assets of US$1 million or more.
  • There are approximately 584,000 multi-millionaires in the world, each with net assets of US$10 million or more.
  • There are 2,252 billionaires in the world, each with net assets of US$1 billion or more.

 

Hotel Residences

This trend is gaining traction in major cities around the world, including in South Africa. In essence, you are bale to purchase apartments/villas in existing hotels. This allows the owner to ltake up permanent residence in a hotel, with all the same services one would expect. According to NWW’s Andrew Amoils, there are many reasons for the rising appeal of this trend: “it appeals to those who travel a lot, your property and facilities are maintained whether you’re there or not.” Furthermore, these residences offer good security and access to large reception areas for meetings or events. And, of course, the all-important room service.

Residential Estates

By now, it should come as no surerise that residential estates are popular. Not only do they offer enhanced security, but residents are also offered access to amenities. Parks, playgrounds, pools, horse riding and even skiing are offered in residential estates around the world. One of the most popular types of estates is of course the golf estate. South Africa ranks as one of the countries with the highest number of  golf estates, along with Portugal, Spain, and the USA. Countries like New Zealand, Mauritius, Mexico, UAE, and the UK are also seeing rapid growth in this sector.

Where to Look

The report indicates several drivers of wealth growth. Aspects like safety, ownership rights, economic growth, low income tax rates, ease of investment, and wealth migration are mentioned as key factors that encourage growth in a country. Woman safety is identified as one of the best ways to gauge a country’s long term wealth growth potential. During 2017, the safest countries in each region were as follows:

Europe: Malta, Poland, Monaco, Iceland

Asia Pacific: Australia, New Zealand, Sri Lanka, Japan, South Korea

Middle East: Israel, UAE

Africa: Mauritius, Botswana, Namibia

From this, the report goes on to explain that countries like Mauritius and Sri Lanka are both expected to perform well in terms of wealth growth going forward.

Effect of HNWI Immigration

The inflow of HNWI is typically a sign of a healthy economy, with Amoils commenting: “the only possible negative of taking in a wealthy person is that they can push property prices up to levels that locals cannot afford.” He adds that Australia has introduced measures to counter this, forcing foreigners to see their properties to locals at a price they can afford.

Countries noted in the report as having had high inflows of HNWI in the past year include Mauritius, Malta, Luxembourg, Cyprus, Portugal, and Spain. In contrast, countries with large outflows of HNWI are typically experiencing larger problems. HNWI typically leave a country for reasons relating to safety, lifestyles, work opportunities, taxes, and standards of living.

Amoils explains that HNWI are typically the first people to leave a bad situation: “They have the means to leave, unlike middle class citizens. If you look at any major country collapse in history, it is normally preceded by a migration of wealthy people away from that country.”

 

Global wealth is expected to rise by 50% over the next decade, reaching US$321 trillion by 2027. This will again be driven by strong growth in Asia. The fastest growing wealth markets are expected to be:

Sri Lanka: Safe country, good educational standard and English speaking. Should benefit from strong growth in the local technology, manufacturing, real estate, healthcare and financial services sectors (10 year wealth growth forecast: 200%).

India: Large number of entrepreneurs, good educational system and English speaking. Strong growth forecast in the local financial services, IT, business process outsourcing, real estate, healthcare and media sectors (10 year wealth growth forecast: 200%).

Vietnam: Emerging manufacturing hub of Asia. Vietnam was the fastest growing wealth market in the world over the past decade and is expected to continue to grow strongly. We expect Vietnam wealth numbers to be boosted by strong growth in the local healthcare, manufacturing and financial services sectors (10 year wealth growth forecast: 200%).

China: Expected to benefit from strong growth in the local hi-tech, financial services, entertainment and healthcare sectors (10 year wealth growth forecast: 180%).

Mauritius: Safe country, business friendly and has low tax rates when compared to the rest of Africa. Hotspot for migrating HNWIs. We expect it to benefit from strong growth in the local financial services sector (10 year wealth growth forecast: 150%).

 

For the full article and many more on Real Estate Investment in SA read our free monthly digimag.

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