London to remain a 'magnet for global super-rich despite Brexit'

UK capital will continue to pull millionaires and billionaires from Asia and Middle East, says report by property consultants

The global super-rich will continue to flock to London despite the UK’s decision to leave the EU, according to a report by property consultants Knight Frank.

The number of UK-based ultra high-net-worth individuals (UHNWIs) – those with more than $30m (£24.2m) in assets – is expected to increase by 30% to 12,310 over the next decade. Liam Bailey, Knight Frank’s head of research, said London would remain “the city of choice” for the super-rich from the Asia and the Middle East despite concerns over Brexit.

“In a European context, London is without doubt the dominant city for the wealthy,” he said. “London is just more accessible for more wealthy people, it is more convenient, more connected and more open than other cities. London attracts talent from around the world, and it will continue to do so.”

Bailey said Britain’s exit from the EU may have some impact on London’s global appeal, butthe UK’s membership of the EU was less important for the world’s richest people than the general population.

While the population of UNHWIs in the UK, which has increased by 28% over the past decade, is expected to keep rising, the number of super-rich on the continent is expected to remain flat or decrease.

“Here growth will be constrained by growing religious tensions, a combination of rising taxes and higher state pension obligations and public healthcare costs, and the loss of high-skilled jobs to Asia,” said Andrew Amoils, head of research at New World Wealth, a market research firm. “We also expect to see some outward migration of HNWIs [high-net-worth individuals, with more than $1m in liquid assets] from these countries.”

More than 10,000 HNWIs left France last year, 6,000 Italy, 3,000 Greece and 2,000 Spain.

The One Hyde Park development in Knightsbridge, London, is among the most expensive real estate in Europe.
The One Hyde Park development in Knightsbridge, London, is among the most expensive real estate in Europe. Photograph: Matt LLoyd/REX

However, the report points out that it is difficult to state which city or country the super-rich call home as so many own several properties across continents. “The world’s wealthy are a footloose group, and the place they call home is only a starting point when trying to unravel the locations that most resonate with them,” Bailey said.

The global population of UHNWIs increased by 6,340 last year to 193,490, after a slight decrease in 2015. Another 60 people were added to the global tally of billionaires last year, taking the total number of dollar billionaires to 2,024 – up 45% over the past decade.

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“One key influence on income in 2016 has been the performance of stock markets in dollar terms,” Amoils said. “In many countries this was much stronger in 2016 than in 2015. There may be widespread uncertainty, but there are also strong fundamentals in many economies, with signs of real progress being made around regulation and policy which will help economic growth to flourish in some places.”

The top concern of the super-rich, according to a survey of 900 private bankers and wealth advisers, was “wealth preservation” and was listed by 66% of wealth managers’ clients. Other pressing concerns were capital growth, inheritance and privacy.

Just 3% listed “being seen as a responsible global citizen” as a pressing concern. When asked to pick the least important factor when considering how to invest their clients wealth, the top two were “philanthropic outcomes” and “being seen as a responsible citizens”.

A gold Ferrari parked in Sloane Street in London.
A gold Ferrari parked in Sloane Street in London. Photograph: Dan Kitwood/Getty Images

The super-rich’s best investment last year was fine wines, which increased in value by 24%, overtaking an index of classic cars, which grew by 9%.

Andrew Shirley, editor of the wealth report, said: “Personal enjoyment was considered the number one reason why UHNWIs collect and buy luxury assets. Often that pleasure is clearly connected to one of our senses – the taste of a great bottle of bordeaux, the visual beauty of a Van Gogh, the sound of a gurgling V8 or rasping V12 engine – but sometimes it’s more to do with our bank balance or our ego.

“Some of these objects of desire also turn out to be shrewd investments so it’s no surprise then that ‘capital appreciation’ is now the second-most-important motivating factor when making a purchase – although many people still find it hard to understand the rationale for buying wine when you have no intention of drinking it.”

Knight Frank said global political uncertainty had caused a spike in private jet travel, with the number increasing from 14,500 to 21,000 over the past decade. The report said that in some regions the risk of kidnapping was a serious concern for the wealthy, and led to 40% choosing to travel by private jet in Latin America and 38% in Russia.

Contributor

Rupert Neate

The GuardianTramp

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