The world’s wealthy are increasingly on the move.
About 108,000 millionaires migrated across borders last year, a 14 per cent increase from the prior year, and more than double the level in 2013, according to Johannesburg-based New World Wealth. Australia, US and Canada are the top destinations, with the UAE a strong draw also, according to the research firm, while China and Russia are the biggest losers.
Wealth migration figures point to present conditions - such as crime, lack of business opportunities or religious tensions - but can also be a key future indicator, says Andrew Amoils, head of research at New World Wealth.
“It can be a sign of bad things to come as high-net-worth individuals are often the first people to leave - they have the means to leave unlike middle-class citizens,” he says.
Australia tops most "wish lists" for immigrants because of its perceived safety, no inheritance tax and strong business ties to China, Japan and South Korea. It also stands out for its sustained growth, having escaped the financial crisis largely unscathed and avoided recessions for the past 27 years.
The US was the second most popular destination in 2018, with New York City, Los Angeles, Miami and the San Francisco Bay area the preferred options.
China’s tightening grip on capital outflows in recent years has placed many of the country’s wealthier citizens in the crosshairs of the taxman, leading to a shift of assets and people. Some rich Asians also move to developed countries looking for more comfort or to improve their children’s education.
As the survey reveals, China saw a mass exodus of 15,000 millionaires in 2018, while some 5,000 Indians moved out of their home country, and France saw 3,000 millionaires leave for new destinations.
The outflow of high-net worth individuals from China and India isn’t particularly concerning from an economic standpoint as far more new millionaires are being created there than are leaving, New World Wealth said.
"Once the standard of living in these countries improves, we expect several wealthy people to move back," Mr Amoils says.
Volatile emerging markets continued to fuel movement, with Turkey losing 4,000 millionaires last year, the third straight year that many have left. About 7,000 millionaires left Russia last year as the country grappled under sanctions imposed over its annexation of Crimea.
The desire for privacy is also prompting rich individuals to reconsider their place of residence.
Under the Common Reporting Standard, launched by the Organisation for Economic Co-operation and Development in 2017, banks and other financial institutions are disclosing data on foreign account holders to their local tax authority. Authorities automatically exchange relevant information with their counterparts overseas annually, allowing governments to zero in on tax evaders. More than 100 jurisdictions have joined CRS, setting a new precedent for the global exchange of data on offshore assets.
This trend is reflected in the growth in demand for second passports and residencies.
"Many wealthy people are looking for opportunities to reduce risks associated with spreading information about their accounts," says Polina Kuleshova of Henley & Partners, which provides citizenship advice and publishes rankings such as the Quality of Nationality Index.
A record 26 per cent of global millionaires will begin to plan for emigration this year, according to Knight Frank’s 2019 wealth report.
Some 42,711 people, about equal to the number of runners in the London marathon, will see their wealth rise to $30 million or more between 2019 and the end of 2023, Knight Frank says. This will take the number of High-Net-Worth-Individuals (HNWIs) worldwide to almost 250,000.
While this 22 per cent increase represents an acceleration in growth compared with the past five years, when High-Net-Worth-Individuals (UHNWI) numbers rose by 18 per cent, the average year-on-year increase of 4 per cent is more measured than the 10 per cent growth seen in 2017 alone, says Gráinne Gilmore, head of UK residential research, Knight Frank.
“Equity markets, real estate markets and luxury investments all had a stellar year in 2017," adds Oliver Williams, head of GlobalData WealthInsight. "Growth in 2018 has been good in some cases, but has not replicated the levels seen in 2017, and the outlook reflects more mixed conditions ahead."
Even so, 2019 marks the point when the number of people globally with $1m or more in net assets – HNWIs – will exceed 20 million for the first time, according to GlobalData WealthInsight. Some 6.6 million of these individuals will be based in North America, with 5.9 million in Europe and a further 5.8 million in Asia.
The UAE is a top draw for the wealthy migrant, the New World Wealth report reveals. There are 240 centi-millionaires living in the UAE, each with net assets of $100m or more and 13 billionaires living in the UAE, each with net assets of $1bn or more.
Dubai was a major beneficiary of changing global wealth trends in 2018, attracting more than 1,000 millionaires from outside the country, surpassing major cities like Los Angeles, Melbourne, Miami, New York, San Francisco and Sydney.
The UAE is the largest wealth market in the Middle East and the 26th largest worldwide (in terms of total wealth held), according to New World Wealth. Notably, it ranks ahead of the likes of Poland, Turkey, Israel, South Africa, Portugal and New Zealand on this measure. People living in the UAE together hold $925bn in net assets (or wealth) and around $470bn (51 per cent) of this is held by HNWIs, the survey says.
The average person living in the UAE, meanwhile, has net assets of approximately $99,000 (wealth per capita). This is well above the worldwide average.
There are approximately 88,700 people living in the UAE, each with net assets of $1m or more and approximately 3,800 multi-millionaires living in the UAE, each with net assets of $10m or more, the report finds.
Approximately 2,000 HNWIs, each with at least $1m worth of net assets, moved into the UAE in 2018, boosting the local economy. The number of affluent migrants in the UAE rose by 2 per cent in 2018, compared to the previous year, according to the report.
Mr Williams highlights the link between entrepreneurialism and wealth creation. “The ease with which a business can be created affects the number of wealthy entrepreneurs in a country and also the spread of wealth,” he says.
Asia is the biggest hub for billionaires, with numbers in the region set to rise above 1,000 by 2023, accounting for more than a third of the world’s billionaire population of 2,696, Ms Gilmore says. China in particular has seen a sharp rise in the number of billionaires in the past five years, but growth looks set to moderate in the medium term.
The ranks of those with net assets of more than $30m expanded by 7,091 in 2018, a rise of 4 per cent. “Growth in non-financial assets – that is, real estate – has been one of the leading factors driving UHNWI growth,” says Mr Williams. “Other factors include returns from both traditional and alternative investments, along with growth conditions in major economies.”
While the expansion of wealth populations is expected to be broadly steady in each of the next five years, some regions will out-perform, says Ms Gilmore. The population of UHNWIs in Asia,for example, is expected to rise by 23 per cent, compared with 18 per cent growth in North America.
India leads with 39 per cent growth, followed by the Philippines (38 per cent) and China (35 per cent). Of the 59 countries and territories in our forecasts, eight of the top 10 countries by future growth are in Asia, with Romania and Ukraine taking the remaining spots.
However, it is worth noting that some of these countries are starting from a low base, Knight Frank's report says. For example, Romania will have 278 UHNWIs by 2023, while Ukraine will have 485. The Philippines is forecast to have 296 UHNWIs by 2023, less than 2 per cent of the ultra-wealthy population of Japan, the biggest Asian wealth hub with 20,570.
In Africa, Kenya leads the way, with 24 per cent forecast growth by the end of 2023. This fits with more upbeat economic forecasts for Kenyan GDP in the coming years, Kingh Frank says, yet risks remain to this economic outlook as the government looks to narrow its fiscal deficit. The number of ultra-wealthy people in the country is set to reach 155 in 2023, making up 6 per cent of the total UHNWI population in Africa.