New wealth hubs are being forged by the post-pandemic economy
Making sense of the latest trends in property and economics from around the globe.
4 minutes to read
Wealth populations
The fortunes of the world's wealthiest people took a hit last year amid declining values of various asset classes.
In the US, the traditional investment portfolio comprising 60% stocks and 40% bonds, a 30-year cornerstone of asset allocation due to their inverse correlation, endured its worst performance since the 1930s. The global ultra-high-net-worth individual (UHNWI) population, those worth at least US$30m, contracted 3.8%. Total wealth held by UHNWIs fell 10%.
A turnaround is coming. Though there remains a great deal of uncertainty, economic data in many locations continues to surprise on the upside and the peak in global interest rates is near.
The global UHNWI population will expand 28.5% during the next five years, according to our forecasts. The top ten locations for growth will be dominated by European and Asian economies, though the US will retain the largest UHNWI population. The detailed breakdown, which we released this morning, offers unique insights into the changing global economy. During the next five years, we're unlikely to match the stellar period of wealth creation that we witnessed since 2017, however new wealth hubs are being forged by the post-pandemic economy. Many of them might surprise you. Click here for more.
The 1% club
What does it take to be among the richest 1%?
The group is often viewed as the epitome of success, however the price of access falls well short of our $30m net worth threshold to be classed as an UHNWI. Even in Monaco, which has
the world’s densest population of super-rich individuals, the entry point for the principality’s 1% is US$12.4 million.
That's almost double the threshold of second place Switzerland, at US$6.6 million. Australia rounds off the top three with US$5.5 million. New Zealand and the US sit in fourth and fifth place with US$5.2 million and US$5.1 million respectively.
All of these levels have risen since we last published the analysis in The Wealth Report 2021, and as we've explored in recent reports, the group is likely to draw greater focus from global governments amid growing inequality. The results could be greater taxation on assets, and perhaps even emissions. For more detail, see this morning's Wealth Report update, linked above.
Election fever
The Labour Party has over the past fortnight sought to capitalise on reported disagreements within the Conservative Party over various policies that could see housebuilding fall significantly. Everything we're seeing suggests that housing could be the central issue in a general election likely to take place next year.
This morning's Times front page carries an interview with Labour leader Keir Starmer in which he fleshes out his plan to make Labour 'the party of housebuilding'. They include:
- giving councils and residents more power to build on green belt land to meet local housing need.
- making it easier to build infrastructure for new housing developments.
- ending the moratorium on new onshore wind turbines in England.
That adds to a pledge earlier this month to reinstate housebuilding targets. Also this week, Labour officials sought to clarify the party's position on rent controls. "Senior party insiders" told the FT that Starmer was "not exploring introducing national rent controls or devolving related powers to mayors if elected." All of that follows a Times story earlier this month on the Conservatives mulling a new buyer support scheme akin to Help to Buy that could be announced during the Autumn.
Renters' Reform
The long promised 'Renters' Reform' Bill will be put before Parliament today. The Bill seeks to deliver on various 2019 Conservative Manifesto pledges, particularly the scrapping of so-called section 21 'no-fault' evictions.
Writing in this morning's Telegraph, Michael Gove said the bill addresses challenges "on both sides" of the landlord, tenant relationship, ensuring that standards improve for tenants, while landlords would find it easier "to kick out faster anti-social tenants whose behaviour blights communities. And we will also improve the ability of landlords to remove more quickly those who persistently refuse to pay rent." Concrete proposals include:
- The ban on S.21 'no-fault' evictions, with a quicker procedure for 'fault-based' evictions.
- A doubling of the notice period for rent increases to two months.
- Repeated serious rent arrears will be a mandatory ground for eviction.
- Extending the 'Decent Homes Standard' to the PRS - currently it applies to social housing.
In other news...
Philippa Goldstein on the tentative but encouraging start to year for UK hotel transactions, and Lee Elliott analyses the Q1 2023 Global Corporate Real Estate Sentiment Index, which points to an encouraging upwards turn in sentiment, but medium term plans are still in doubt.
Elsewhere - Landsec boss warns of ‘higher for longer’ interest rates (FT), BlackRock calls employees back to the office four days a week (FT), productivity growth slips to lowest level in a decade (Times), and finally, China's house price growth fizzles (Bloomberg).