The coronavirus outbreak has changed the way the world works. It has also significantly impacted the world's wealthy, from where they're choosing to live, to what and how they are spending their money.
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And while some countries have contained the outbreak relatively well, to their ability to recover economically from the crisis - others are seeing an exodus of their High Net Worth Individuals (HNWIs).
Countries that appear to have handled the pandemic best so far, with a relatively low number of coronavirus related fatalities include New Zealand, South Korea, Australia, Malta and Mauritius. As a result, Australia is seen as the leading destination to live in when it comes to the world's richest, with a 3% growth in its HNWIs population, and a net inflow of 12 000 HNWIs in 2019, according to New World Wealth research.
Sydney and Melbourne both rank in the top five cities where the world's rich prefer to base themselves. However, Monaco, Malta, Mauritius and Caribbean Islands & Bermuda appear to top the list for significant inflows (100+ HNWIs) of millionaires in 2020.
Notably, NWW's research shows South Africa is seeing outflows of its most wealth but not to the extent of China's which tops the 2019 data list, having bid farewell to over 16 000 of its richest individuals.
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South Africa however, does fair far better than it Africa counterparts, with over "twice as many millionaires as any other African country".
"The country ranks 30th in the world by this measure, ahead of major economies such as Greece, Portugal and Turkey. Currently, just over 35 000 HNWIs are living in SA (as at Sept 2020).
Worldwide stats for June 2020, according to NewWorldWealth:
- Total private wealth held worldwide amounts to approximately US$184 trillion (about R15.10 at R15.10/$).
- The average individual has net assets of around US$24,000 (wealth per capita).
- The five wealthiest countries in the world by this measure include Monaco, Luxembourg, Switzerland, Australia and the United States - they all have a wealth per capita of over US$175,000 per person.
- There are approximately 13 million HNWIs in the world, each with net assets of US$1 million or more.
- There are approximately 510,000 multi-millionaires in the world, each with net assets of US$10 million or more.
- There are approximately 22,800 centi-millionaires in the world, each with net assets of US$100 million or more.
- There are 1,920 billionaires in the world, each with net assets of US$1 billion or more.
SA wealth stats (for Sept 2020):
- Approximately 680,000 mass affluent individuals are living in SA, each with net assets of US$100,000 or more.
- There are approximately 35,000 millionaires (HNWIs) living in SA, each with net assets of US$1 million or more. Most of these HNWIs are based in Johannesburg (Sandton especially), Cape Town, Umhlanga and Pretoria.
- Approximately 1,800 multi-millionaires are living in SA, each with net assets of US$10 million or more.
- There are 86 centi-millionaires living in SA, each with net assets of US$100 million or more.
- 5 billionaires are living in SA, each with net assets of US$1 billion or more.
The top factors that attract HNWIs to South Africa include:
- Lifestyle aspects: weather, beaches and scenery.
- A large free media which helps disseminate reliable information to investors. This sets South Africa apart from most other emerging markets worldwide.
- One of the 20 biggest stock exchanges in the world (by market cap).
- A well-developed banking system and large fund management sector.
- Hub for doing business in the rest of Africa.
- Luxury food stores such as Woolworths, which appeal to wealthy consumers.
- Exclusive areas such as Umhlanga Rocks and the Atlantic Seaboard in Cape Town.
- Top-end estates and apartments. SA is a global pioneer in estate living and is home to many of the world’s best lifestyle estates. New World Wealth estimates that over 45% of SA HNWIs either live or have homes on estates. An additional 30% have homes in luxury apartment blocks (which have been the fastest-growing residential segment in SA over the past 20 years in terms of price growth).
- Good transport infrastructure.
- World-class shopping centres such as: Gateway, Sandton City and the V&A Waterfront.
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The 2020 Global Wealth Migration Review research shows the following key trends for HNWI spending and wealth can be expected to take shape in 2021.
Impact on HNWI spending:
• A move away from commercial airliners and towards private jet travel, especially among the super-rich (i.e. centi-millionaires and billionaires).
• Many HNWIs may choose to work remotely and live in smaller towns. For instance, many London based HNWIs may choose to move to towns such as Taplow and Marlow. Country areas such as the Cotswolds could also become more popular.
• Less international tourism. The luxury hotel sector in each country will become more dependent on local HNWIs.
• HNWIs will probably avoid public transport in big cities (buses, tubes).
• Luxury residential estates such as the Yellowstone Club could become more popular, as HNWIs seek more open space.
• HNWIs may choose to buy more of their luxury items online or via appointment.
• HNWIs to move away from large hotels and towards small boutique hotels.
• Indoor gyms to become less popular, with a move towards outdoor exercise.
• Outdoor hobbies/sports that allow for easy social distancing (such as golf, hiking, fly-fishing, cycling and bird-watching) may become more popular.
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Impact on HNWI wealth:
The coronavirus has also had a severe impact on the overall worldwide economy - our latest estimates show that global HNWI wealth levels have dropped by 14% in the 1H* of 2020 (US$ terms). This drop has been driven by:
• Declining income levels and job losses.
• The property market weakened in most major markets, especially the prime (top-end) market.
• Rising household debt. Debt is subtracted when calculating net assets so this has a negative impact on private wealth.
• Most major currencies have weakened against the US$. This has negatively impacted on the US$ based wealth of most people globally, especially those living in the BRICS and other emerging markets (as those currencies have been hardest hit).
• Declining global stock market returns – the MSCI World Index was down by around 6% over the six month period. The MSCI Emerging Market Index was especially hard hit (10% down).
Wealth Tier Definition:
- Billionaires - Those individuals with wealth of US$1 billion or more.
- Centi-millionaires- Those individuals with wealth of US$100 million or more.
- Multi-millionaires - Those individuals with wealth of US$10 million or more.
- Millionaires (HNWIs)- Those individuals with wealth of US$1 million or more.
- Mass Affluent - Those individuals with wealth of over US$100,000.
*“Wealth” refers to the net assets of a person. It includes all their assets (property, cash, equities, business interests) less any liabilities.
*1H 2020 refers to the period from 1 January 2020 to 30 June 2020.
(Source: New World Wealth; AfrAsia Bank; Steyn City)
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