UHNWIs Grew by 4.2% in 2023, Says Report

The Number of ultra-high-net-worth individuals (UHNWIs) rose 4.2% globally in 2023 to 626,619 from 601,300 a year earlier, according to a research by Douglas Elliman and Knight Frank and this increase more than reversed the decline witnessed in 2022.

The report also said that their numbers are expected to increase by 28.1% over the next five years to 2028. While positive, this rate of expansion is noticeably slower than the 44% increase experienced in the five-year period to 2023.

The flagship report entitled “The Wealth Report,” which was released on March 6, said that while the US lead with the number of UHNWIs up 7.2%, the Middle East comes in second place (6.2%) and Africa takes third place, up 3.8%. Latin America is the only region to see its population of UHNWIs decline by -3.6%.

In terms of key country performance, Turkey leads Knight Frank’s rankings with a 9.7% expansion in UHNWI numbers, followed by the US 7.9%, India 6.1%, South Korea 5.6% and Switzerland 5.2%.

Liam Bailey, Global Head of Research at Knight Frank, said that the improving interest rate outlook, the robust performance of the US economy and a sharp uptick in equity markets helped wealth creation globally.

“At the end of 2023 there were 4.2% more UHNWIs than a year earlier, with nearly 70 very wealthy investors minted every day, taking the global total to just over 626,619,” he said.

Scott Durkin, President and CEO of Douglas Elliman, said that this year’s report shows a long-awaited generational shift in wealth. With $90 trillion worth of assets moving from boomers to millennials, millennials are poised to become the richest generation in history.

“Moreover, changing attitudes in wealth creation show the continued rise in female UHNWIs. As to where UHNWI’s are moving?  New York City, Los Angeles and Miami continue to be the most popular destinations for the ultra-wealthy,” he added.

Wealth Revival

The revival in wealth creation was supported by global economic growth and the improved fortunes of key investment sectors. 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 S&P Global 100 delivered a 25.4% 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, the report said.

Residential capital values grew by 3.1% across the world’s leading prime markets through 2023. For investors, residential returns were supported by prime global rents rising at an average three times their long-run trend. Other sectors delivered positive returns during the year, with gold up 15% and Bitcoin up 155%, reversing a large part of the losses sustained by this volatile asset in 2022.

Asia to Lead

The report points to strong outperformance from Asia, with high growth in India (50%), the Chinese mainland (47%), Malaysia (35%) and Indonesia (34%).

Liam Bailey said that with the mobility of wealth increasing all the time, the key question has been 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. 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, he said.

Liam Bailey further said that almost a fifth (19%) of UHNWIs plan to invest in commercial real estate this year, while more than a fifth (22%) were 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, he said.