Kenya has been tipped to create at least 7,500 new dollar millionaires in the next nine years as Nairobi grows to be among the most preferred cities in the world for investment.
A significant rise in the number of millionaires (those with at least Sh100 million each, excluding their residential homes) and that of ultra-high-net-worth individuals (those with at least Sh3 billion) is expected in Mauritius, Ethiopia, Tanzania, Uganda, Kenya and Rwanda over the next decade, says a report by British property consultancy firm Knight Frank.
Of the 20 countries polled, 11 are in Africa, something consistent with the philosophy that Africa is rising , says “The Wealth Report: Global Perspective on Prime Property and Investment”.
In Africa, the number of new ultra-wealthy people rose from 2,010 in 2006 to 2,270 last year, owning $260 billions worth of wealth. By 2026, the number is expected to rise to 3,030, a 33 per cent increase. It means that the growth in ultra-wealthy people in Africa and Latin America will outpace that of Europe and North America over the next decade, the report says.
But Africa also showed a worrying trend because none of the countries was listed among the most preferred by this wealthy pool of people, on account of high political risk.
“Countries that offer a fiscal and political ‘safe haven’, as well as excellent quality of life, are expected to see strong growth over the next decade in ultra-wealthy people; and saw their numbers increase in 2016. Australasia, Canada, Malta, the UAE, Qatar, Monaco and Israel are examples of key ‘safe havens’ attracting migrating ultra-high-net-worth individuals.
CREATE AND PRESERVE WEALTH
“Nearly three-quarters of respondents to our Attitudes Survey highlighted political uncertainty as a significant threat to their clients’ ability to create and preserve wealth,” the report says, after an interview of 900 financial managers across the globe managing wealth of $2 trillion belonging to 10,000 people.
Although the rise in millionaires could be a factor of market forces, such as the performance of stock markets and astute financial decisions, it appears political events matter, too. In Nigeria, for example, political tensions that saw the election of President Muhammadu Buhari and his delayed announcement of the cabinet meant there was no new millionaire expected in 10 years.
“The momentum gained in wealth creation in 2016, although relatively modest, was far from being a foregone conclusion, especially given that nearly three-quarters of respondents to our Attitudes Survey highlighted political uncertainty as a significant threat to their clients’ availability to create and preserve wealth,” observed Grainne Gilmore, head of UK Residential Research, Knight Frank, in a statement.
In Nairobi, there are 6,800 millionaires, 280 multimillionaires (those with Sh1 billion at least, excluding their residential homes) and another 120 ultra-wealthy people, according to the report. By 2026, this number could rise to 220. But there is a General Election coming this August, which could tilt the image of the country. Previous elections have been followed by tension and violence, with investors shying away. In 2008, 113 people were killed and another 600,000 people displaced, with millions worth of property looted or destroyed.
The number of people joining the billionaire club in Kenya has been rising since 2006 when there were only 60 people worth Sh3 billion or more. The number is highest in eastern Africa, but Mauritius was particularly praised for creating an environment that could create more millionaires by 2026.
London and New York are still key investments hubs in the world but the rise of Asian cities such as Beijing and Hong Kong could change the dynamics in the next decade.
In this report, two thirds of the wealthy said they consider environments that would preserve their wealth key, another half said they valued passing their success to their next generation with four in ten saying they prioritise minimising risks to their investments.
The number of people joining the billionaire club in Kenya has been rising since 2006 when there were only 60 people worth Sh3 billion or more. The number is highest in eastern Africa region, but Mauritius was particularly praised for creating an environment that could create more millionaires by 2026.
The island nation has which has a reputation “as a relatively safe, business-friendly country with lower tax rates than many countries in Africa, is expected to remain a popular retirement hotspot for the wealthy.
“The country will also be bolstered by its strengthening local financial services, with a forecast 130 per cent rise in its UHNWI population over the next decade.”
Mauritius is also the least corrupt country in Africa and listed 54th globally, according to Transparency International Corruption Perception Index. Kenya on the other hand is listed 145th out of 176.
Globally, the number of ultra-wealthy people rose by 6,340 in 2016 to 193,490 compared to 2015. London and New York are still key investments hubs in the world but the rise of Asian cities such as Beijing and Hong Kong is likely to change the dynamics in the next decade.
Researchers reached the conclusion after analysing measures of current wealth, investment, connectivity and future wealth of cities around the world.