New World Wealth’s extensive South African Wealth Report for 2020 has been released, detailing a decline of 36% in property prices, over the last decade.
And with approximately 38,400 millionaires (HNWIs) living in SA, each with net assets of US$1 million (about R18.92 million at R18.92/$) or more, the report shows there's still some serious money being bandied about across the tip of Africa.
The Real Estate sector remains the second highest category for wealth creation for High-Net Worth Individuals (HNWIs) at 14% overall, following Finance and Professional services at 32%, at the top of the report's Wealth Creation scale.
Equities is currently the largest asset class for HNWIs in South Africa, accounting for around 29% of their assets. This is followed by real estate at 25% and business interests at 20%.
And while Joburg tips the total wealth scale with $243bn spread across its 16 300 $millionaires, 850 multi-millionaires and 2 billionaires, it is Cape Town that is home to the most exclusive and expensive suburbs in South Africa.
Sandton still the wealth capital
Johannesburg's total wealth amounts to US$243 billion. Most of Johannesburg’s wealth is concentrated in Sandton, which is home to the JSE (the largest stock market in Africa) and to the head offices of most of Africa’s largest banks and corporates.
Exclusive suburbs in Johannesburg/Sandton include: Hyde Park, Sandhurst, Westcliff, Houghton, Bryanston, Saxonwold, Park Town, Atholl and Inanda. Major sectors in the city include: financial services (banks), professional services (law firms, consultancies), telecoms and basic materials.
Cape Town's total wealth held in the city amounts to US$131 billion. Home to SA’s most exclusive suburbs such as: Clifton, Bantry Bay, Fresnaye, Llandudno, Camps Bay, Bishopscourt and Constantia. Also home to a number of top-end residential estates including: Erinvale, Steenberg and Silverhurst Estate. Major sectors there include: real estate, financial services (fund management), retail and tourism.
Durban & Umhlanga's Total wealth held in the city amounts to US$56 billion. This figure includes wealth held in Durban, Umhlanga, La Lucia and Ballito. Notably, Umhlanga and Ballito are two of the fastest growing areas in SA, in terms of wealth growth over the past 10 years.
| Most expensive streets in South Africa: | Rand per square meter | US$ per square meter |
| Victoria Road, Clifton and Bantry Bay, Cape Town | 80 000 | 5 700 |
| The Ridge & Cliff Road, Clifton, Cape Town | 78 000 | 5 600 |
| Nettelton Road, Clifton, Cape Town | 76 000 | 5 400 |
| Clifton Road, Clifton, Cape Town | 75 000 | 5 400 |
| V&A Marina, Dock Road, City Bowl, Cape Town | 72 000 | 5 100 |
| Most expensive streets (outside of Cape Town): | ||
| Lagoon Drive, Umhlanga |
40 000 | 2 900 |
| Beachyhead Drive, Plettenberg Bay | 37 000 | 2 600 |
| Most expensive suburbs in SA: | ||
| Clifton | 72 000 | 5 100 |
| Bantry Bay | 67 000 | 4 800 |
| Fresnaye | 54 000 | 3 900 |
| Camps Bay & Bakoven | 49 000 | 3 500 |
| Llandudno | 46 000 | 3 300 |
So what else are these HNWIs spending their money on?
"Over the past 10 years, there has been a movement of funds away from real estate and towards equities and alternatives such as "private equity holdings, venture capital investments and commodities," according to New World Wealth's analyst Andrew Amoils.
The average South African HNWI currently holds around 20% of their wealth offshore. This compares to 14% a decade ago.
"Popular foreign investments for SA HNWIs include US ETFs, US$ cash and UK second homes."
Interestingly enough, the report notes these individuals also love putting their money into collectables such as art, classic cars, top-end watches, jewellery, fine wine and stamps. However their yachts, private jets and new cars are seen as "unlikely to hold their value" over time.
"SA HNWIs hold around US$480 million (about R9bn at R18,93/$) worth of fine art.
"Notable artists that they collect include: JH Pierneef, Irma Stern, Maggie Laubser, Alexis Preller, Gerard Sekoto, Vladimir Tretchikoff, Sydney Kumalo (sculpture), William Kentridge, John Meyer, Walter Battiss, Cecil Skotnes and Anton van Wouw (sculpture)."
'SA is the largest wealth market in Africa'
South Africa is the largest wealth market on the continent and the 32nd largest worldwide - in terms of total wealth People living in SA together hold US$636 billion in wealth.
"Around US$267 billion (42%) of this is held by millionaires (HNWIs).
"The average SA individual has net assets of approximately US$11,000 - wealth per capita (about R208k at R18,93/&). This is a relatively healthy level when compared to most other emerging markets," says Amoils.
"Performance over the past year was also poor, with wealth held in the country declining by 2% in 2019. This drop was caused by a weakening residential property market locally and a lack of new business formation. A number of HNWIs also left the country during the year."
As expected, wealth forecasts remain relatively poor for 2020/2021 due to the expected impact of the coronavirus on stock markets, the Rand, salaries and general business opportunities in SA.
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