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Where the world’s ultra-wealthy reside
- April 1, 2022: Vol. 9, Number 4

Where the world’s ultra-wealthy reside

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New data from this year’s Wealth Report by Knight Frank shows that the number of ultra-high-net-worth individuals (UHNWIs) grew 9.3 percent between 2020 and 2021. Nearly all regions saw an increase during the time period. UHNWIs are defined as having net assets of $30 million or more, including their primary residence.

With more than 230,000 UHNWIs in 2021, North America has the largest subset, followed by Asia at nearly 170,000. Over the past year, the ultra-wealthy population rose 12.2 percent and 7.2 percent across these regions, respectively.

Following North America and Asia is Europe, where during 2021 the top countries for the ultra-wealthy were France (30,000), Germany (28,000), the United Kingdom (25,000) and Italy (17,000). On a per capita basis, Monaco has the highest concentration of the ultra-wealthy, with five UHNWIs per 1,000 residents.

Interestingly, the ultra-rich in Russia and the Commonwealth of Independent States (6,500) grew the second fastest across all regions, at 11.2 percent, probably attributable to rebounding oil prices, property prices and stock market valuations — though economic sanctions imposed in response to Russia’s invasion of Ukraine could substantially impair oligarch wealth for many years to come.

How will UHNWI populations change in the next five years?

Globally, the number of ultra-rich is projected to increase 28 percent by 2026. By way of comparison, the percentage increase in UHNWIs between 2016 through 2021 was almost three times that rate, at more than 75 percent.

Asia is projected to have the highest growth rate, along with Australasia (the region encompassing Australia, New Zealand and some neighboring islands). In five years, UHNWIs are set to rise 33 percent in both regions. Singapore is projected to see its ultra-rich population grow 268 percent, while the ultra-rich living in mainland China are anticipated to grow 42 percent.

Meanwhile, North America is projected to see 28 percent growth, reaching 300,000 UHNWIs by 2026.

Fueling this worldwide growth in UHNWIs are a combination of sky-high asset prices and a boom in real estate valuations, according to Knight Frank. The average UHNWI owns 2.9 properties.

Ultra-low interest rates, which declined during the pandemic, is another factor cited by the report. Given cheap borrowing costs, the ultra-wealthy have more leverage to build their wealth, such as buying more property or investing in financial assets, (though interest rates are now on the rise).

It’s worth noting that strong GDP projections often underlie wealth projections. The International Monetary Fund predicts the post-pandemic recovery will be robust, though the war in Ukraine could pose risks to the global economy, driving inflation and creating volatility in financial markets.

For instance, Russia contributes 12 percent to the global oil supply, a key factor behind inflation. At the same time, Ukraine supplies 90 percent of America’s neon (an essential material used in the manufacture of semiconductors), which could further exacerbate supply-chain issues.

 

Excerpted from the Visual Capitalist. Read the complete report here: https://bit.ly/3vGjqR0

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