A comprehensive review of the wealth sector in Africa has revealed that Africa’s wealth has declined in the last decade in dollars from $ 2.2 trillion to $ 2.1 trillion and millionaires with assets over $ 1 million have decreased by 2,000 from 136,000 in 2011. Number Hundreds of millionaires and billionaires, however, have been shot through the roof. In their report, Henley and company and New world wealth (NWW) pointed to the rise of border economies like Mauritius while South Africa’s performance is complete last decade has been poor, but the total private property in the country has decreased by 12%. Director of Research at NWW, Andrew Amoils, said BizNews about other developments they have reported, including that many of the super-rich South Africans are leaving their big houses and moving not only into estates, but into apartments, and investing in passion. They predict strong growth in private wealth in South Africa and the continent over the next decade. The full report is available at BizNews.com – Linda van Tilburg
Private equity in Africa linked to poor currency performance
There has been a 7% decline in total capital in Africa and private assets have fallen by 7%. This is mainly because currencies in most major African markets have performed rather poorly against the dollar and obviously wealth and total assets are measured in dollars. So that’s the main reason for the decline. There have been certain economies that have struggled but others, especially in larger markets such as South Africa, Egypt and Nigeria. South Africa fell by 12% and Egypt – which had a lot of instability in connection with the Arab Spring – was a significant fall there as well. In Nigeria, the currency has been hit hard against the dollar; with oil prices, this dropped considerably at one level although it has recovered now, which has had a pretty bad effect on them. All major markets have been affected by the transfer of wealth to where the rich have been going and that has also been a factor.
South Africa has lost fewer rich people than other BRICS; some have returned
It is probably an 80% organic reduction and the 20% reduction is due to wealthy people moving. There are mainly general economic conditions around the US dollar and the stock market and real estate prices. These are the main factors. This is probably due to a 20–25% reduction in wealth transfers. Some countries have attracted wealth like Mauritius. Wealthy people moved there. In fact, South Africa has not lost as many rich people because some rich people have returned to South Africa. So the decline could have been worse, and if you look at many other BRICS countries, the big emerging markets, they are losing far more wealthy people than South Africa. I sometimes think it’s turned into a slightly bigger story than it is. For places like Egypt and Nigeria, they have lost more in percentage terms. They have lost far more wealthy individuals than the emigration from South Africa. Also, many South Africans who left South Africa sometimes return, which does not seem to be the case in many other emerging markets. This is sometimes the case in India and China, but in many other emerging markets, individuals with high assets tend not to return.
Three reasons for that Mauritius has been a big winner
There has been a lot of growth in the last two or three decades. I think there were three main factors that contributed to that. There has been growth in local financial services, which has been huge; a lot of the rich have moved there; and it is also a fairly safe country, one of the safest in the world. I think it has driven wealth because security and wealth tend to complement each other. There are probably three main elements and most of the wealth is created internally. But as I mentioned, since many rich people have moved there, it has pushed the numbers up. Although they are the richest country in Africa in terms of wealth per capita, they have a population of about 1.5 million. So, there are not so many, who help with per capita; about $ 35,000 per person in net assets. South Africa is in second place with about $ 11,000 in Africa.
Investing in passion is becoming more and more popular in South Africa
South Africa has one of the largest fine markets in the world. It weighs more than its weight given the size of the art market. Many South African artists have $ 2-3 million worth of works. some of their top works. So it is very well established. Many are dead but they are in the South African market. Individuals who are essentially wealthy have bought a lot of these artists like Irma Stern, Maggie Laubscher and Pierneef. Over the last 20 to 30 years, this has raised prices. Classic cars are becoming very popular; it is full of classic cars in the South African market. Although not often auctioned here, they are owned by wealthy South Africans. Yes, a lot of these investments in passion are becoming increasingly popular in South Africa.
It’s not all miserable for South Africa, but security is still at stake
I think there are many positive things that we are looking at in South Africa in our report. The media industry is fairly well developed, especially the financial media. It has one of the largest stock markets in the world, which fits in very well with the developed banking and asset management sector. It is a world leader in living, which protects it from some security problems. It is a business center in many other countries in Africa. There are many positive things in South Africa. I think the big risk factor in Africa is security. If you look at wealth in any country; if you look at the richest countries in the world in terms of wealth per capita, America is obviously the richest in terms of total wealth. In terms of per capita, well, Switzerland, Australia, Monaco – which is a very small country – these countries are all very safe. Even some of the fastest growing high-income markets like Malta are also very secure. It is one of the key factors in terms of wealth growth; it is not a direct contribution to wealth, but it seeps through everything else in terms of business formation and everything else. Security is the main risk factor in South Africa and, to be honest, in most African countries with the possible exception of Mauritius and Namibia, which are relatively safe.
Great movement from detached houses to residential … and apartments
There has been a lot of relocation of housing and apartments. Apartments are generally the safest and have also been moved towards apartments in estates. It’s a new trend in recent years; it creates a double safety net because you are in the estate as well as you are living together. With an apartment you have only one access point, one door; it is naturally much safer. The estate has private security and all that, but it does not completely cover the country because people cannot live on the estate all their lives. So it has created movement. If you look at the wealthy who have returned to South Africa from places like the UK, the majority have moved into estates or luxury apartments. Many wealthy people living in South Africa are moving away from detached houses and buying apartments, high-quality apartments and places to live. There are several driving factors, it’s not just for safety. It’s a cost issue. Prices and levies have risen so much on detached houses. Maintenance of a large house is becoming more costly than before, so there are fewer people moving into apartments. There is a lot of movement from detached houses towards apartments and luxury lifestyle properties. There are areas like Camps Bay and Clifton, which have no estates and probably never will and wealthy people will always live in these areas. But some other areas that are less well-known and less popular with wealthy individuals may have difficulty moving people to apartments and flats.
Private wealth growth in Africa and South Africa is forecast to grow over the next decade
Our forecast for Africa is for 40% economic growth over the next decade in terms of US dollar wealth. Well, this will be largely driven by very strong growth in places like Rwanda, Mauritius, Uganda and Kenya. We expect quite strong growth in Morocco, Zambia and Mozambique. So we also have a fairly strong economic growth forecast for South Africa, around 35% over the next decade. I think there are various reasons. We expect the currency to outperform the dollar, which has been a major problem for the past decade and has devalued the dollar. We are also expecting very strong growth in the top rich bands like hundreds of millionaires in the future and we expect great growth in the sector in areas like professional services, financial services and IP industry like business outsourcing over the next decade. As a result, our forecasts are relatively optimistic, but forecasts are never known. We have to see what happens.
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12% decline in private wealth in SA over the last decade, Mauritius rises
Source link 12% decline in private wealth in SA over the last decade, Mauritius rises