As the focal point of new wealth shifts to the East, who are the super-rich and where are they keeping their cash? Elliot Wilson finds out
The face of global wealth is changing. Gone are the days when lists of the super-rich were dominated by enterprising or entitled Americans and Europeans.
In the modern world, wealth is both more diversified – spread over borders, gender and industry – and highly mobile. New wealth tends to be made rather than inherited and each addition to the growing army of high-net-worth individuals (HNWIs) is more likely than ever to be Chinese, Nigerian or Emirati.
Despite the lingering effects of the financial crisis, wealth continues to grow apace at the higher ends of the spectrum. Total investable wealth held by all global HNWIs (anyone with a fortune of at least $1 million) will rise to $55.8 trillion (£33.6 trillion) by 2015, from $46.2 trillion in 2012, according to the Capgemini and RBC Wealth Management 2013 World Wealth Report.
Nor is anyone losing out in the über-rarefied air occupied by ultra-HNWIs. Just under 200,000 people boasted personal assets of at least $50 million in 2013, up from around 187,000 the previous year, according to the World Ultra Wealth Report 2013 produced by UBS and US-based consultancy Wealth-X.
The nationality of premier-league wealth is also in flux. Western states, humbled and scarred by the financial crisis, still prove mighty capable of generating new wealth or attracting it to its shores. North America’s UHNWIs boosted their cumulative wealth by 9 per cent year-on-year in 2013, to $9.7 trillion.
Even Europe’s super-wealthy did well in 2013 for the first year in five, boosting their total net worth by 10.4 per cent to $7.7 trillion, as the continent skirted outright disaster.
“The West isn’t dead yet,” says Sebastian Dovey, managing director of Scorpio Partnership, a London-based research outfit that tracks the investment behaviour of the super-rich. “Wealth is still being created across developed and emerging markets by entrepreneurs from Britain to Asia.”
Indeed, the basic principles of wealth management help explain why the West’s monied elite survived the recent years relatively unscathed. Economic growth creates fortunes, but wealth preservation stems from “softer” factors like the rule of law and strong democratic principles. In its 2013 report, Capgemini and RBC noted that more than half the global population of HNWIs was concentrated in the United States, Japan and Germany.
Yet the long-term picture shows a different story, as the focal points of new wealth shift inexorably from the West to Asia, the Middle East, and parts of Latin America and Africa. Capgemini and RBC tipped Asia to boast the largest number of HNWIs by region this year, while the UBS and Wealth-X report sees the total net worth of Asia’s super-wealthy surpassing Europe’s by 2017 and North America’s by 2024.
The Middle East and Africa provide their own, compelling narratives. The former’s recent success is nothing short of remarkable. Capgemini expects the number of HNWIs to grow at a compound annual rate of 6.8 per cent between 2012 and 2015, second in pace only to Asia. The region’s ultra-wealthy are also on the march. Spurred on by high oil prices and rising state spending in Saudi Arabia and the UAE, the net worth of the region’s ultra-wealthy grew in 2013 by 23.9 per cent.
Africa’s prospects have also soared thanks to rising commodity prices and infrastructure spending. Africa-based HNWIs saw their total wealth rise 10 per cent year-on-year in 2012, according to Capgemini, aided by robust economic figures.
But it remains a tale of two continents. The troubled northern part, which includes Egypt, is still recuperating from the Arab Spring, while Sub-Saharan Africa (SSA) is booming thanks to thriving energy and services sectors. Wealth-X chief executive Mykolas Rambus says Africa boasts several “fledgling stars”, such as Nigeria, a nation poised to overtake South Africa as the continent’s largest economy.
The number of ultra-wealthy Nigerians surged 32 per cent in 2013, according to the UBS and Wealth-X report, faster than any other sovereign state, followed by Kenya (24 per cent), and Ethiopia and Angola (both 10 per cent) – all SSA states. Compare that to likes of troubled Tunisia and Algeria, where the ultra-wealthy saw their fortunes fall or remain flat.
Perhaps the only region to disappoint in 2013 was Latin America, where the population of both the wealthy and the super-wealthy declined for both of the past two years.
Economic growth creates fortunes, but wealth preservation stems from “softer” factors like the rule of law and strong democratic principles
And the nature of great wealth is changing in other ways. It matters less where fortunes are made, it seems, and rather more where they reside. Wealthy Chinese, Russians, even French, are fleeing brittle, greedy or capricious governments in search of reliability and lower taxes.
This, says Liam Bailey, head of residential research at global property consultants Knight Frank, explains why the Chinese super-wealthy are flocking to London. “People want to invest in the ‘Anglosphere’ – English-speaking cities like London, New York and Sydney,” Mr Bailey says. “They are attracted by English-speaking schools, plus the UK system of property law is very clear-cut – it’s easy to enter and exit the market without being fleeced.”
London’s super-rich outnumber Paris by more than 50 per cent, followed distantly by the great industrial and financial centres of Germany and Switzerland.
Wealth is also more likely than ever to be earned rather than endowed. Two thirds of the global ultra-wealthy are self-made, with a combined fortune of $18.3 trillion, according to the 2013 UBS and Wealth-X report, which notes that inherited wealth is “no longer… a requirement to become an UHNWI, a continuous trend over the past 20 years”.
Matthew Robinson, head of private clients at London-based boutique investment managers Westbury Private Clients, adds: “There’s less money out there globally in the traditional aristocratic classes, and more than ever in the likes of banking, finance and new technology.”
While wealth still tends overwhelmingly to be controlled by men (88 per cent of all UHNWIs) who tend also to be married (95 per cent), and self-made (70 per cent), the shift, slowly but surely, is toward greater gender equality. In Germany and Australia, female UHNWIs are worth, on average, five times more than their male counterparts.
Despite having a smaller UNHW population than Germany, Britain boasts more ultra-wealthy women – 1,200 compared to 1,070. Ultra-wealthy women tend also to be younger than their male peers (54 against 58), while the average age of great wealth appears to rising rather than falling, thanks in the West to a generation of self-made baby-boomers.
It seems to matter less than ever where you’re from, who your parents are, what your chromosome count is or where you choose to keep, invest and save your money. Wealth is increasingly mobile and liquid, able to leap or straddle political boundaries at will. The global face and nature of wealth is changing, and in ways that affect us all.