Wealth migration trends in 2015

Transcription

1 Wealth migration trends in 2015 Part 2 Publication date: October 2016

2 Migration trends Traditional wealth movements over the past decade: Chinese HNWIs moving to USA, Canada and Australia. Indian HNWIs moving to UAE, UK, Canada, USA, Australia and New Zealand. Russian HNWIs moving to UK, Cyprus, Portugal and the Caribbean. Recent and future trends: Brazilian HNWIs moving to Portugal. Indonesian HNWIs moving to Singapore. Turkish HNWIs moving to UAE. UK HNWIs moving Australia. Nigerian HNWIs moving to UK. French HNWIs moving to UK, Canada, Australia and USA. The following countries had the biggest net inflows and outflows of millionaires in Countries ranked by millionaire net inflows, 2015 Country Net inflow of millionaires in 2015 Millionaires, 2015 % added Australia % United States % Canada % Israel % United Arab Emirates % New Zealand % United Kingdom % Notes: Numbers rounded to nearest Source: New World Wealth Note: Millionaires otherwise known as high net worth individuals or HNWIs refer to individuals with net assets of US$1 million or more excluding their primary residences.

3 Countries ranked by millionaire net outflows, 2015 Country Net outflow of millionaires in 2015 Millionaires, 2015 % lost France % China % Italy % India % Greece % Russian Federation % Spain % Brazil % Notes: Numbers rounded to nearest Source: New World Wealth Changing of the guard Australia dominates Apart from being a hotspot for wealthy migrants from Asia and Europe, Australia is also becoming an increasingly popular destination for wealthy UK and USA citizens. This could signify a changing of the guard so to speak as the UK and USA have traditionally been the most sought after destinations for the world s super-rich. However, this may be changing. According to interviews we have done with migration experts over the past few months, Australia is now seen to be a better place to raise children than the US and the UK, which could be encouraging wealthy Brits and Americans to move there. Inheritance taxes are also likely to be a factor Australia has lower inheritance taxes than the US and much lower inheritance taxes than the UK. There is also a trend of US and UK based companies setting up offices in Australia, which assists the businessmen in charge of these companies in moving to Australia via work and investor visas. Australia s superior growth over the past decade has also no doubt had an impact on business opportunities over the past 10 years, total wealth held in Australia has risen by 85% compared to 30% growth in the US and 28% growth in the UK. As a result, the average Australian is now significantly wealthier than the average US or UK citizen, which was not the case 10 years ago (see our recent W10 study). Additional points: Australia has one of the best healthcare systems in the world. In the UK, the NHS is deteriorating, whilst in the US the mandated healthcare insurance (Affordable Care Act enacted in 2010) has created some problems for wealthy patients.

4 Australia s location makes it a good base for doing business in emerging Asian countries such as China, Hong Kong, Korea, Singapore, Vietnam and India. Australia is relatively immune to the turmoil in the Middle East and the related refugee crisis in Europe. Australia was recently rated as the safest country in the world by New World Wealth. Australia is a particularly safe country to raise children (although some describe it as a nanny state with too many rules). Australia is a good base for wealthy retired yacht owners who wish to sail the South Pacific Islands. Religious tensions in France The large outflow of millionaires from France is notable France is being heavily impacted by rising religious tensions between Christians and Muslims, especially in urban areas. We expect that millionaire migration away from France will accelerate over the next decade as these tensions escalate. In our view, other European countries where religious tensions are starting to emerge such as Belgium, Germany, Austria, Sweden and the UK will also be negatively affected in the near future. Of further concern, since 2000, France has experienced a net outflow of over 60,000 millionaires. Around 10,000 left in 2015 and a further 12,000 are expected to leave in 2016 based on our year to date estimates. This shows that wealth migration away from the country is accelerating. China and India outflows not a concern The outflows from India and China are not particularly concerning as these countries are still producing far more new millionaires than they are losing. Also, once the standard of living in these countries improves, we expect several wealthy people to move back. Southern Europe in trouble Southern European countries such as Italy and Greece have both seen large outflows of millionaires over the past few years and we expect this exodus to continue going forward. In our view, the possible breaking up of the EU would hit these countries the hardest due to their large unsecured state pension obligations. Russia and Brazil are tricky ones Russia and Brazil both have strong potential for growth, but the outflow of millionaires from these countries over the past year is a concern.

5 Russia has a number of underlying problems, mainly related to an unhealthy level of government intervention in the local business sector. Its anti-usa and anti-europe stance is also harming inward investment and making it difficult for foreign companies to enter the market. In Brazil, the downturn in the local economy, the zika virus and rising crime rates are pushing many millionaires out of the country. It is difficult to predict when the situation there will improve. Turkey and Nigeria may be next We expect millionaire outflows from Nigeria and Turkey to increase over the next few years. Both of these countries are suffering from serious political and economic problems. They are also both being negatively impacted by terrorism and religious violence. Why do millionaires leaving a country matter? Bad sign - millionaires are often the first people to leave. They have the means to leave unlike middle class citizens. Money outflow when millionaires leave a country, they take large amounts of money with them which impacts negatively on the local currency, local stock market and local property market. Lost jobs - millionaires employ large numbers of people. Around 30% to 40% of millionaires are business owners. Lost revenue and tax millionaires spend a lot of money on local goods and services and pay a large amount of income tax. Pensions & benefits - millionaires are not reliant on state pensions and benefits, which makes them a relatively easy and cheap group to please. Resilient millionaires are resilient to economic downturns and can keep an economy going during tough times. Brain drain millionaires are normally highly skilled and highly educated. Many are also innovators. Common reasons why millionaires leave a country: Woman safety and general crime. Financial concerns. Schooling and education opportunities for their children. Work transfers. Business opportunities. Taxes. Healthcare system. Religious and racial tensions. Lifestyle: climate, pollution, space, nature and scenery. Standard of living.

6 Brexit impact on the UK In our view, the recent vote to leave the EU will not result in an outflow of millionaires from the UK. On the contrary, we believe that wealthy UK citizens are more likely to stay in the UK now. This view is backed up by the fact that many of the wealthy British people we interviewed over the past few years voiced concern over the UK s open border policy with Europe. We also believe that the language issue has been under-played in the media. The UK, Ireland and Malta are the only English speaking countries in the region which is a major advantage when dealing with companies in Asia, Australasia, Africa and North America (most of which have English as their first or second language). In short, the EU needs the UK a lot more than the UK needs the EU. Specifics: In our view the upcoming Brexit will likely result in: No more open borders with the EU and the UK leaving the single EU market. However, we expect that the UK will retain open borders with Ireland and Malta. EU nationals already in the UK will be allowed to stay. However, the UK government will introduce incentives for hiring UK citizens, which will make it more difficult for EU nationals to gets jobs in the UK. Less strain on UK public healthcare and pensions systems. Job losses in UK banking and media sectors offset by job gains in IT, manufacturing and healthcare sectors. Britain re-introducing 2 year working visas for citizens from Canada, Australia and New Zealand. The UK may even push for open borders with these countries. Stronger alliances with former English colonies such as Australia, Canada, USA, New Zealand, India and South Africa. Stronger alliances with emerging Asian countries such as China, India, Hong Kong, Singapore, Korea and Vietnam. London spotlight During our study, we noticed a trend of UK born millionaires moving out of London to nearby towns such as: Windsor, Bray, Ascot, Virginia Water, Leatherhead, Weybridge, Henley, Marlow, Beaconsfield, Cookham, Bourne End, Shiplake, Sonning, Taplow, Maidenhead, Cambridge and Oxford. Some are even moving as far away as the Cotswolds and then commuting into London for work 3 to 4 days a week. Notwithstanding this trend, London still experienced a net inflow of millionaires in 2015 assisted by strong inward millionaire migration from Asia, Europe, Africa and the Middle East into the city. Notably, millionaires from these countries still see London as their preferred worldwide destination despite the Brexit.

7 Sources & Methodology We gathered this information via: Investor visa program statistics in each country. Interviews with around 800 global HNWIs a year. Interviews with intermediaries (migration experts, second citizenship platforms, wealth managers and property agents). Property registers and property sales statistics in each country. Tracking of HNWI movements in the media. Notes & Definitions Millionaires otherwise known as high net worth individuals or HNWIs refer to individuals with net assets of US$1 million or more excluding their primary residences. Net inflows equal inflows less outflows. This is our 3rd annual global migration paper.

8 About New World Wealth New World Wealth is a global wealth intelligence and market research company. We provide customized services to: wealth managers, wealthy individuals (HNWIs), family offices, real estate professionals and fund managers. Services on offer include: Ratings and surveys. Wealth statistics on 120 countries worldwide. Country and regional wealth reports. Political & economic analysis. Management consulting. Migration statistics. HNWI surveys* *We interview over 800 HNWIs every year in order to determine their preferences. Our wealth statistics leverage off our in-house HNWI database, which comprises dossiers on over 150,000 HNWIs from around the world. New World Wealth is based in Johannesburg, South Africa. For more information on New World Wealth please visit

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