Print this article

World's HNW Population Bounces Back – Knight Frank

Tom Burroughes

28 February 2024

Rising markets in 2023 helped lift the world’s total population of ultra-high net worth individuals by 4.2 per cent, said in a report. This shift reversed the drop in 2022 when markets fell amidst higher interest rates.

The total number of UHNW individuals stood at 626,619 from 601,300 a year earlier, the real estate consultancy said in a report, issued today.

According to The Knight Frank Wealth Report, it expects the number of wealthy individuals globally to rise by 28.1 per cent over the next five years to 2028. While positive, this rate of expansion is slower than the 44 per cent increase experienced in the five-year period to 2023. The report points to strong outperformance from Asia, with high growth in India (50 per cent), the Chinese mainland (47 per cent), Malaysia (35 per cent) and Indonesia (34 per cent).

At a regional level, North America leads with the number of UHNW individuals, rising 7.2 per cent, the Middle East comes in second place (6.2 per cent) and Africa takes third place (up 3.8 per cent). Latin America is the only region to see its population of wealthy individuals decline (-3.6 per cent). 

Turkey set the fastest pace for growth in this cohort – up 9.7 per cent – followed by the US (up 7.9 per cent), India (up 6.1 per cent), South Korea (up 5.6 per cent), and Switzerland (up 5.2 per cent).

“The improving interest rate outlook, the robust performance of the US economy and a sharp uptick in equity markets helped wealth creation globally,” Liam Bailey, global head of research at Knight Frank, said.

Knight Frank noted that several investment sectors improved in 2023.

"In the first half of 2023, despite ongoing rate tightening and rising bond yields, equities surged on the back of enthusiasm surrounding AI. Even as this trend waned in the second half of the year, declining inflation and the anticipation of earlier and more substantial rate cuts provided renewed momentum to equity markets,” the firm said. “The S&P Global 100 delivered a 25.4 per cent annual increase in 2023, albeit this was hugely flattered by the outstanding performance of the `magnificent seven’ US tech stocks.

“While some sectors grappled with the lingering impact of elevated debt costs, particularly commercial real estate and private equity, residential property values surprised on the upside,” it continued.

The firm said residential capital values grew by 3.1 per cent across the world’s most prominent prime markets through 2023. Other sectors delivered positive returns during the year, with gold rising 15 per cent and bitcoin gaining 155 per cent – reversing its previous losses.

The outlook
“With the mobility of wealth increasing all the time, a key question is whether future growth remains within these and other high-growth markets, or whether there is a leakage of talent to Europe, Australasia or North America,” Bailey said. “Outside Asia, strong growth is focused on the Middle East, Australasia and North America, with Europe lagging and Africa and Latin America likely to be the weakest regions.”

Real estate 
“The expanding cohort of wealthy individuals looks favorably on real estate. Almost a fifth (19 per cent) of UHNW individuals plan to invest in commercial real estate this year, while more than a fifth (22 per cent) are planning to buy residential. Growth over the forecast period provides various opportunities for investors, particularly developers able to deliver property that suits the shifting tastes of the newly minted."

What it takes to be “the one per cent”
In all the markets the report has assessed, the 1 per cent threshold starts “far below” the $30 million entry point for becoming a UHNW individual.

European hubs top the list, led by Monaco, where $12.9 million is the threshold to join the "one per cent club." Following behind is Luxembourg at $10.8 million and Switzerland at $8.5 million. Perhaps surprisingly, bearing in mind its dominance in terms of overall wealth creation, the US comes in fourth, at $5.8 million. Within Asia-Pacific, Singapore leads the regional pack with a requirement of $5.2 million.

“The Knight Frank findings confirm the substantial differences in wealth distribution between countries, with smaller hubs demonstrating a bias toward higher thresholds,” Bailey said. “As Western countries in particular grapple with government deficits and the need to raise tax revenue, expect greater policy focus on where wealth is located, how it is distributed across economies and how governments can both tax it and encourage its growth: not an easy mix of outcomes to secure.”

Knight Frank said the intergenerational shift will see $90 trillion of assets move between generations in the US alone, making affluent Millennials the richest generation in history. 

Wealth is becoming more diverse: Survey findings from Altrata suggest that women make up around 11 per cent of global UHNW individuals. While still not a large share, this is up from just 8 per cent less than a decade ago.