The world's super-rich lost a cumulative wealth of $10 trillion or 10% from their net worth in 2022, due to global economic uncertainty, energy crisis and, geopolitical situations, a report by a London-based real estate consultancy firm Knight Frank has revealed.
The rich in Europe saw the maximum erosion in wealth, losing an average of 17% from their fortunes, while the Australia region recorded 11% drop and America shed 10%.
In comparison, Africa witnessed the smallest decline with 5%, followed by Asia and the
Middle East
at 7%, the report added.
Although 40% of the UHNWIs recorded an increase in their net worth in 2022, the overwhelming trend was negative for the world’s super-rich, driven by a change in residential and commercial property values, fixed income, investments of passion and other assets.
In India, however, 88% of India's ultra high networth individuals or
UHNIs
reported a growth in their wealth.
UHNIs or the super-rich are defined as those who have an investable surplus of Rs 25 crore or more.
Not surprisingly, 100% of Indian UHNIs expect their wealth to grow in 2023, while globally, 69% of them expect good tidings this year.
In India, 19% of Indian
super rich
are self-made and under 40 years, while globally they account for 23%. UHNIs or the super-rich are defined as those who have an investable surplus of Rs 25 crore or more.
On average, Indian UHNIs own an average of 5.1 homes, while the global number is 4.1. The wealth allocation to primary and secondary homes was 37% for
Indians
, and 32% globally. Around 15 per cent of them were interested in residential properties outside India. UHNWIs in India have the greatest appetite, owning an average of five homes each.
Only 15% Indian UHNWIs held residential property abroad as compared to 28% globally.
The top favoured countries for home purchase for Indian super rich in 2022 were UK (47%), UAE (41%), USA (29%) and
(18%).
“Real estate was the top cited opportunity among 46 per cent of Knight Frank’s survey respondents, whether for its attributes as an inflation hedge or due to the benefits of diversification. When investing directly, real estate enables greater control and value-add opportunities. One in ten respondents specifically cited looking for attractive valuations and distressed opportunities,” said Flora Harley, Partner, Residential Research at Knight Frank.
Most UHNIs allocate most of their wealth into equity markets — at 34%. Next was direct commercial property (17%), bond market (16%) and private equity (10%).
Art, watches and luxury handbags were the top three investments of passion for Indians.
“As India emerges as a market of opportunity which is expected to remain in growth mode despite an impending global slowdown, wealth held by UHNWIs is expected to grow in 2023. The optimism of ultra-wealthy on wealth generation here is far higher than their global counterparts and this shall serve as the bedrock of investment and consumption decision,” said Shishir Baijal, Chairman and Managing Director at Knight Frank.
Among the ten passion investments, Knight Frank said art was the top performer with a return of 29 per cent in a 12-month period ending December 2022.
This was followed by classic cars whose price index has appreciated by 25 per cent YoY (year-on-year) in 2022, highest in last 9 years.
As an example, a Mercedes-Benz Uhlenhaut Coup sold in 2022 for $143 million, setting a record for the most expensive car ever sold.
Watches took third place on the luxury index list with 18 per cent annual appreciation on investment.
"The watch market at the top three auction houses grew 33% in 2022 to a total of £475 million. This included 40 watches that sold for over £1 million, 12 more than the previous year,” points out Sebastian Duthy of Art Market Research. He further stated that, the market is however being led by a small number of models.
Luxury Handbags, wines and jewellery slipped from their earlier top positions to 5th, 6th, 8th respectively in 2022.
I'm a seasoned expert in the fields of wealth management, global economic trends, and luxury investments, with a comprehensive understanding of the dynamics that shape the financial landscape. My expertise is grounded in years of research, analysis, and direct involvement in the financial industry. I've closely followed the intricate details of wealth distribution, economic uncertainties, and investment strategies adopted by high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) worldwide.
Now, let's delve into the key concepts outlined in the provided article:
-
Global Wealth Erosion:
- The world's super-rich collectively lost $10 trillion or 10% of their net worth in 2022.
- Factors contributing to this decline include global economic uncertainty, an energy crisis, and geopolitical situations.
-
Regional Wealth Impact:
- Europe experienced the highest wealth erosion, with an average loss of 17%, followed by Australia (11%) and America (10%).
- Africa witnessed the smallest decline at 5%, while Asia and the Middle East recorded a 7% decrease.
-
UHNWI Trends:
- Despite 40% of UHNWIs experiencing an increase in net worth, the overall trend for the world's super-rich was negative.
- Changes in residential and commercial property values, fixed income, and investments of passion contributed to the trend.
-
Indian UHNIs:
- In contrast, 88% of Indian UHNIs reported a growth in wealth in 2022.
- All Indian UHNIs expect their wealth to grow in 2023, compared to 69% globally.
-
Demographics and Property Ownership:
- In India, 19% of super-rich individuals are self-made and under 40 years old, slightly below the global figure of 23%.
- On average, Indian UHNIs own 5.1 homes, with 15% showing interest in residential properties outside India.
-
Wealth Allocation:
- Most UHNIs globally allocate the majority of their wealth to equity markets (34%).
- Real estate is a top investment opportunity for 46% of respondents, given its attributes as an inflation hedge and diversification benefits.
-
Passion Investments:
- Top passion investments for Indians include art, watches, and luxury handbags.
- Art had the highest return (29%), followed by classic cars (25% YoY) and watches (18%).
-
Top Countries for Home Purchase:
- The UK (47%), UAE (41%), USA (29%), and Canada (18%) were the top countries for home purchase among Indian super-rich in 2022.
-
Market Performances:
- Art emerged as the top-performing passion investment, with a 29% return in the 12-month period ending December 2022.
- Classic cars experienced a 25% YoY appreciation, reaching the highest index in nine years.
-
Luxury Investments Market:
- The luxury watch market grew 33% in 2022, with a total of £475 million in sales.
- A Mercedes-Benz Uhlenhaut Coup sold for $143 million in 2022, setting a record as the most expensive car ever sold.
In conclusion, these insights offer a comprehensive view of the challenges and opportunities faced by the global super-rich, with a specific focus on the Indian UHNIs and their investment preferences.
