Private wealth and investment migration firms should be looking beyond the hype and scrutinize the data when carving out their long-term business development strategies and identifying which jurisdictions to target.
The recently issued Knight Frank Wealth Report outlines which regions are home to the biggest number of HNWIs and UHNWI and which ones that will expand fastest by 2025. We provide a global overview of the key trends in wealth hubs the world over.
America the money powerhouse of the world
A lot has been said about the new interest of affluent Americans in Caribbean and European golden visas – undeniably the US is the powerhouse of the world and home to its most affluent individuals.
But should private wealth and investment migration firms be looking beyond the hype and instead scrutinize the data when carving out their long-term business development strategies?
Australasia comes out an all-star’s wealth hub across the board. It is set to have a healthy increase in its HNWI and UHNWI segment, and in comparison, to other advanced/developed regions of the world it will also have an above average increase in its affluent middle-class population in the next five years.
Leading the UHNWI populations proportional growth are unsurprisingly Asia and Africa. These two regions are forecast to multiply the number of UHNWIs they have exponentially by 2025. In the HNWI population segment, Europe, Asia, and Australasia take the top spots in terms of the % growth over the coming years.
Asia – The number one region for increasing UHNWIs
Asia is the region forecast to have the fastest growing population of UHNWIs (US$30 Million+). It’s top tier of citizens is expected to grow 39% by 2025 (!) – so in case you weren’t aggressively targeting this market already it is definitely a continent to focus your business development efforts if you are serving private clients.
Interesting to note – the Asian HNWI population will also likely expand by an eyewatering 46% in the next 5 years, coming second only to Europe in this segment of the population.
Africa – A booming middle class and growing UHNWI population
The number of households which will have an income over US$ 100,000 will continue to grow exponentially in Africa at about 139% suggesting the average purchasing power of the masses will increase substantially. This is of most interest to the digital and consumer goods businesses keen to expand their reach in this booming African continent.
Yet, the number of individuals with more than US$ 1,000,000 will only grow by 25% over the next 5 years which, whilst it is still a considerably increase in the coming years – is in fact the lowest growth forecast in the HNWI segment of the population according to Knight Frank.
As for the number of UHNWIs – it’s expected that there will be an increase of 33% by 2025 which is the second highest growth rate globally. The surge in the wealth population is therefore expected to be most favourable for the highest tiers of society across Africa – those with over US$30 million. This expanding class of incredibly affluent individuals will become tomorrow’s new private client for Wealth Managers and Private Bankers and tomorrows future investor for Golden Visas and Second Citizenship solutions.
The Middle East – Trailing Growth Rates across its populations
The number of households which will earn over US$100,000 will increase by 40% – this is in fact lower than the global average forecast of 45% in this segment of the population
HNWIs and UHNWI populations in the Middle East will be increasing at a conservative rate of 29% and 25% respectively. Hence over the next five years this region is likely to have one of the least expansive wealth markets.
Read more: Can Hong Kong still be a Family Office hub for wealthy families?
Australia – Down Under ranks On Top
Being a highly developed area of the world, it is positive to see that the % forecast growth of households which will earn over US$ 100,000 will increase by 66% which is well above the global average (45%) and notably higher than N. America’s 14%. One considerable segment of population that will be growing in the next 5 years is its HNWIs – set to expand in size by 40% (!). Across the board Australasia’s forecast growth in the number of wealthy individuals is impressive – it ranks in the top 4 in HNWI and UHNWI categories – certainly a market to watch.
Whilst the pandemic has been remarkably managed thanks to travel limits imposed in both Australia and New Zealand – those who have the funds available may be more inclined to explore options that give them greater global mobility in the future, especially after what could be almost two years of stringent border controls. Whether it is a Portuguese golden visa or a St. Lucian passport the rich in Australasia could prove to be a strategic market to establish a foothold in.
Europe – A Strong Base and Unrivaled HNWI segment
In comparison to the US, by 2025 the number of households which will have incomes over US$100,000 will grow by 82% vs. 14% indicating that the middle class in Europe will share in the wealth growth more equitably than its American neighbour across the pond.
Europe also takes the gold in its HNWI population growth – expected to swell by an astounding 49%.
In a very contrary picture, UHNWI populations in Europe will increase by a mere 23% in the coming years, on par with UHNWI population growth forecasts in the US of 24%.
North Americans – Limited Growth for the Masses
The future appears grim for the middle classes in the US as the number of households which will have incomes over US$100,000 income will only rise by 14% well below the global average of 45%. Could this lead to North Americans seeking greener pastures abroad?
Perhaps.
Where the forecasts seem most favourable for North Americans is for the HNWI segment of the population which should grow by 25% within 5 years.
LATAM – Burgeoning Middle Class – Stagnating Upper Classes
Not only has the continent been faring against the pandemic but also a surge in controversial tax reforms and a high degree of political volatility. How will the next 5 years look for this region? The middle-income segment is due to grow by 108% by 2025, its HNWI population though and UHNWI population will grow less than the global average though at 34% and 25% respectively.
Russia & CIS – A Bullish Polar Bear
Russia has traditionally been a key market for the private wealth and RCBI industries. Looking ahead it is expected that the trend will continue. Impressively, Russia and the CIS area are expected to have a monumental increase in the % of its population which will have higher household incomes – the Knight Frank estimate is a 144% boom in its middle class by 2025. Its UHNWI population will also grow by 27% on par with the global rate of growth and its HNWI population should increase by 34% in the coming years.
