Amid uncertainty around the post-pandemic era, economic turbulence and political conflicts, the world is witnessing a drastic change in the global wealth landscape. This report reveals the major changes and trends in the ultra-high-net-worth world.
The Knight Frank annual wealth report 2023 reveals that ultra-high net worth individuals worldwide have shed a tenth of their cumulative wealth, suffering from a loss of over $10 trillion. This is a direct result of the turbulence in the global economy caused by the Russia-Ukraine war and high inflation. Europe lost an average of 17% of its wealth as a result of being at the centre of this crisis. Reportedly, Asia and Africa witnessed the smallest decline in wealth. The Hurun Global Rich List further confirms that the Asian ultra-rich are the least affected by the erosion of wealth worldwide. According to the list, China remains home to the largest number of billionaires in the world, with a total of 969 high-net-worth individuals. The United States (US) came in as the second, hosting 691 billionaires. The two economies accounted for over half of the billionaires in the world, asserting their economic importance.
The Hurun Global Rich List is widely recognised as the foremost authority in tracking the changes in the Chinese ultra-rich landscape. While it is often compared to the Forbes list and can differ significantly at times, the Hurun Global Rich List shares very similar findings with the Forbes real-time billionaires list this year. Both lists have indicated that Elon Musk, the CEO of Tesla is no longer the richest person in the world. Bernard Arnault, the CEO of luxury conglomerate LVMH overtakes Elon Musk and is currently the first place on the global rich ranking. Coincidentally, Bertrand Puech, CEO of luxury giant Hermes has risen to become the third richest person on the Hurun Rich List 2023. This suggests that the luxury industry is able to withstand the challenges in the markets.
On the other hand, the world is witnessing a dramatic reversal of wealth in the technology industry. This is attributed to the impact of the Covid-19 pandemic-driven tech bubble. The global wealth ranking can often reflect the trends in the global economy and the tech industry grew tremendously during the pandemic. This has resulted in over-hiring and as we gradually recover from the pandemic, the bubble has now burst. We have seen significant layoffs from major tech companies such as Facebook, Microsoft and Amazon. Tech tycoons such as Amazon’s founder Jeff Bezos and Microsoft’s founder Bill Gates have recorded significant reduction in their wealth and have moved down the rank compared to last year.
The Residential Real Estate Report 2023 by Altrata navigates the residential footprint of the ultra-rich. The US continues to dominate the market, occupying 6 positions among the top 10 cities in which ultra-wealthy individuals maintain primary or secondary residences. Hong Kong is ranked third globally and takes first place among Asian cities. Asia has three cities in the global top 10 with Beijing and Singapore coming after Hong Kong. This further indicates Asia’s strong presence in the global wealth landscape. Interestingly, despite not making the list, Monaco has the world’s highest density of ultra-wealthy residents as well as second homeowners. With one out of 39 residents being an ultra-high-net-worth individual, you are most likely to be neighbours with the ultra-rich in Monaco. Inflation will be a significant factor driving investment decisions among ultra-high-net-worth individuals and Family Offices this year. As residential properties are considered the best hedge against inflation among all asset classes, we anticipate luxury residential real estate will continue to be a robust asset class among the ultra-rich and their respective Family Offices.
In terms of goals for their wealth, 31% of the ultra-high-net-worth individuals surveyed by Knight Frank identified capital growth as their biggest goal for wealth in 2023. This was followed by 28% for wealth preservation, 23% for income generation, and 14% for diversification. We believe that this trend will be reflected in the Family Office sector, with Family Offices continuing to focus on wealth preservation and creating returns through investment to facilitate intragenerational wealth transfer for the families they serve.
This year, the world witnessed a great shuffle in global wealth. With new trends emerging, come challenges and opportunities. We will continue to observe the trends and changes in the global wealth landscape and see what the future holds for the Family Office sector.