The number of ultra-high-net-worth individuals (UHNWIs) in the world rose 9.3 per cent last year as a global economic rebound from the pandemic and rising equity markets supercharged wealth creation, according to a report by global property consultancy Knight Frank.
Last year saw the addition of 52,000 ultra-wealthy people globally. The growth in wealth was evenly spread across regions, with North America leading the pack and registering a 12.2 per cent increase in wealth for UHNWIs in 2021. Only Africa saw a decline in wealth, according to The Wealth Report 2022.
Knight Frank defines UHNWIs as people who possess a net wealth of $30 million or more, including primary residences and second homes not held as investments.
About 129,557 UHNWIs are self-made and below the age of 40, Knight Frank research found.
“Notwithstanding uncertain times, we have still seen substantial wealth creation globally with the number of people with net wealth of $30m or more increasing by almost 10 per cent last year,” said Roy Penn, head of Knight Frank Private Office.
The Covid-19 pandemic pushed the global economy into its deepest recession since the 1930s, prompting governments to inject $16 trillion in fiscal stimulus to bolster their economies. Stimulus packages, backed by $9tn in monetary support from central banks, led to a resurgence in stock markets, propelling global equities to record highs.
Meanwhile, the total wealth of high-net-worth individuals, or people with a net worth of $1m or more, including their primary residence, rose 7.6 per cent in 2020 to about $80tn, driven by government stimulus measures and rising equity markets, according to Capgemini.
The global number of HNWIs grew by 6.3 per cent in 2020 to surpass the 20 million mark, the global consultancy said in a 2021 report.
The top five regions that saw the biggest wealth gains for UHNWIs in 2021 were the US, the UK, France, Japan and China, Knight Frank said.
Asset prices from property markets to stock markets and luxury collectibles all helped to boost the fortunes of those wealthy enough to hold investment portfolios, the consultancy added.
“We haven’t seen that level of wealth growth since 2017,” said Flora Harley, deputy editor of The Wealth Report.
“We saw huge amounts of savings as people didn’t go out and spend in restaurants or on holidays. All of this resulted in an accumulation of wealth.”
Eighty-two per cent of wealth advisers and private bankers surveyed by Knight Frank said clients’ wealth increased last year, with more than half describing the rise as “significant” or by more than 10 per cent.
Meanwhile, 83 per cent of those polled expect clients’ wealth to grow further this year, the report said.
There will be a further 28.3 per cent increase in global UHNWI numbers by 2026, Knight Frank said. By 2026, Asia will surpass Europe as the second-largest regional wealth hub, it added.
In terms of investment preferences, 18 per cent of UHNWIs now own some kind of cryptocurrency, while 11 per cent have invested in non-fungible tokens (NFTs), the report found. Real estate accounts for 27 per cent of investable wealth in UHNWI investment portfolios.
More than 60 per cent of wealth advisers see blockchain technology as an investment opportunity for their super-affluent clients, according to the report.
Seventy-nine per cent of wealth advisers also view private equity or venture capital as an increasing opportunity for wealth growth and preservation, Knight Frank said.
Around 80 per cent of ultra-wealthy investors want more environmental, social and governance (ESG)-compliant assets to future-proof their portfolios, the report found.
However, the biggest barriers for ESG-related investment among UHNWIs include lack of opportunities, access to reliable information and a lack of understanding of ESG, Knight Frank said.