The number of UHNWIs globally surged to 626,619 last year and, according to the 2024 Knight Frank Wealth Report, the trend is expected to increase exponentially over the next four years.
The 18th edition of the respected Knight Frank Wealth Report was released on Wednesday 6th March, offering a global perspective on prime property and investment for the year 2023.
In its focus on wealth generation, the report’s authors note that, on the back of a year impacted heavily by rising interest rates, 2023 saw a resurgence in wealth creation supported by a shift in the interest rate landscape driven by healthy performance of the global economy and a recovery in equity markets.
Which countries saw the most wealth growth in 2023?
Major economies worldwide managed to avoid downturns in 2023, ushering in a period of robust growth. Noted by The Wealth Report, global GDP expanded by a commendable 3.1%, marking a promising trend for the economic landscape.
Emerging economies, particularly in Asia, spearheaded the recovery, with India emerging as a standout example. While Europe encountered challenges in gaining traction, the United States showcased a remarkable performance, buoyed by government stimulus measures.
As a result, the number of Ultra High Net Worth Individuals (UHNWIs) globally surged by 4.2% to 626,619, surpassing the figures from a year earlier and offsetting the decline observed in 2022. North America and the Middle East led the regional wealth creation, with a growth rate of 7.2% and 6.2% respectively. However, Latin America experienced a decline in the population of wealthy individuals.
Turkey emerged as the top performer in UHNWI numbers, boasting a remarkable 10% expansion, closely followed by the United States with an 8% increase.
What led to the increase in wealth in 2023?
The surge in wealth creation found support from global economic growth and improved prospects in key investment sectors. Despite ongoing rate tightening and rising bond yields, equities experienced a surge in the first half of 2023, driven by enthusiasm surrounding AI.
This momentum persisted through the second half of the year, fuelled by declining inflation and the anticipation of earlier and more substantial rate cuts, propelling equity markets forward. The S&P Global 100 registered a notable 25.4% annual increase in 2023, largely influenced by the exceptional performance of the “magnificent seven” US tech stocks.
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As noted in the report, while certain sectors grappled with the lingering impact of elevated debt costs, such as commercial real estate and private equity, residential property values exceeded expectations. Residential capital values across the world’s leading prime markets grew by 3.1% throughout 2023, with prime global rents experiencing an average increase three times their long-run trend, providing robust support for investors.
Moreover, other sectors delivered positive returns during the year, with gold appreciating by 15% and Bitcoin surging by 155%, effectively reversing a significant portion of the losses incurred in 2022.
Looking ahead
The experts at Frank Knight expect the number of wealthy individuals globally to rise by 28.1% during the five years to 2028. These affluent individuals are showing a strong interest in real estate investment, with nearly 20% of UHNWIs intending to venture into commercial real estate this year, and over 20% aiming to purchase residential properties.
The report notes that, as the market expands, investors, especially developers capable of providing properties aligned with the needs of these wealthy individuals, stand to benefit from various opportunities.
“The Covid-19 pandemic disrupted the construction of new homes, notably impacting the luxury segment, particularly in markets like London. However, this disruption creates a significant opportunity window for developers in the short to medium term,” say they authors of the report.
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