Knight Frank published its 2020 Wealth Report this week and as usual, it contains some interesting insights into the mindset and investment trends of the global UHNW community. Below I’ve summarised some of the key findings I think will be of interest to my clients and colleagues also operating in the family wealth industry.
To begin with, the report shows that the number of global UHNWIs (those with assets of more than $30m(£26.5m)) rose by 6% in 2019 to 513,244. This number is expected to increase to 650,000 by 2024 with wealth growing in India, Egypt, Vietnam, China and Indonesia. It’s worth noting however that the Wealth Report is based on information Knight Frank gathered before the Coronavirus was known about and so it remains to be seen how that will affect business in 2020, particularly in China.
Looking at where these 513,244 UHNWIs are investing their money, property remains the most attractive asset class with 4 out of 5 UHNWIs planning to increase or maintain their current allocations to property in 2020.
Private capital was responsible for $333 billion of commercial real estate purchases in 2020 which was an increase of 5% on the previous year. And while for 2020 24% of UHNWIs plan to invest in domestic commercial property many have also allocated capital for international purchases. Wealthy Middle East investors have the greatest appetite for overseas commercial property with 32% actively targeting commercial property abroad with the UK high on their list of targets.
The office sector remains the primary target for private capital investors, with healthcare, hotels and leisure following closely behind.
ESG investments are also growing in popularity and in the luxury investment market rare whisky has been overtaken by designer handbags as the highest growing luxury asset. An Hermès Kelly bag was sold at Hong Kong Christies in 2019 for US$241,000, setting a new auction record for a non-diamond bag of its type. The value of collectable handbags has risen by an impressive 13% over the last 12 months while whisky and fine art only provided a 5% return on average.
Also of interest is that 70% of wealth managers responding to the report’s survey said their clients’ philanthropic activities were increasing and 75% are becoming more concerned about climate change. 80% of UHNWIs are also spending more time and money on their personal wellbeing.
It remains to be seen if some of the predictions the report has made will be realised in 2020, or whether a global outbreak of Coronavirus will have a lasting impact, particularly on wealth in China.