_10 trends shaping wealth and investment in 2019
1. Despite a darkening outlook for the world economy, wealth creation will remain a constant in 2019. The global UHNW population is forecast to rise by 22% over next five years, meaning an extra 43,000 people will be worth more than $30m by 2023.
2. Asia’s strong economic performance (the region hosts eight of the top 10 countries with the fastest growing wealthy populations) means 2019 will be the year the number of dollar millionaires globally exceeds 20m for the first time. India will lead annual growth in millionaires 39%, followed by the Philippines (38%) and China (35%).
3. Existing UHNWIs expect their wealth to increase over the next 12 months, with confidence most marked in the US where 80% expect rising fortunes.
4. Hard Brexit, no Brexit, Brexit-lite. Whatever the outcome London will remain the leading global wealth centre in 2019. With the world’s largest UHNW population, the city sweeps the board in the Knight Frank annual City Wealth Index, pushing its only serious rival, New York, into second place.
5. As wealth increases 2019 will see governments settle into two camps: the first will try to attract more of it; and the second will seek to push it away. In the former camp sits Italy, who's new ‘non-dom’ regime will kick fully into gear this year and will result in a growing band of wealthy migrants enjoying la dolce vita in return for a fixed tax payment of €100,000 on their worldwide income. Conversely, Singapore, Australia, New Zealand, Canada, the UK and others will make wealthy non-residents jump through ever larger hoops to access their property markets.
6. Hoops or not, the wealthy will continue to demand access to global markets, especially as emerging market economies see their growth rates slow and the search for diversification grows. A record 26% of global UHNWIs will begin to plan for emigration this year, and to help them a record number of countries will offer citizenship and residency through investment schemes, with Moldova and Montenegro being only the latest to offer themselves as wealth havens. As some governments race to attract wealth, a backlash will grow with the OECD and the EU, amongst others, placing more countries under the microscope as efforts to combat tax evasion increase.
7. The desire for mobility means wealth exporting nations will begin to watch their currency and foreign reserves increasingly closely. Recent capital controls in China will remain in place, while In India a two-year 144% increase in outbound remittances will create risks of additional controls - but the strength of economic growth will delay action in for 2019 at least.
8. As wealth moves more rapidly around the world, investors will become increasingly active in their investment strategies. Rising interest rates and the end of quantitative easing means we are reaching the end of the ‘everything bubble’. In the past decade it was enough to buy classic cars, art or property and the generosity of central banks would help deliver super-charged returns. As this process unwinds property investors will become increasingly focussed on: income, asset management and development opportunities. Investors in 2019 will increase their exposure to education facilities, student housing “last mile” logistics property, as well as targeting office investment in key tech and innovation markets.
9. Expect slower price growth in key luxury residential markets, with more markets seeing values fall this year. As values adjust, buyers will feel the balance of power shift in their favour. The search for deals will combine with currency movements to propel more purchasers into last year’s “most unfashionable market” – London
10. Beyond property, the world of collectibles will see continued expansion of interest. Expect a boom in investment in one drink in particular. A 400% rise over the past decade in the Knight Frank Rare Whisky Index; new direct flights between Edinburgh and Beijing; 40% annual growth in sales of Scotch to India and China; and a £1.2m record sale price for a single bottle - all point towards celebrations in Scotland’s distilleries