_Knight Frank launches The Wealth Report 2024 (18th edition)

Now in its 18th year, The Wealth Report provides a unique global perspective on private wealth and prime property.

March 06, 2024

The annual publication includes a wide range of topics, including wealth distribution, price movements across 100 luxury residential property markets, the top 1% wealthy population, commercial real estate investment, to provide the most comprehensive and well-rounded analysis of the impact of wealth on investment and the world’s major real estate markets.

Highlights from the report include:

Among all countries and territories, Hong Kong and the Chinese mainland are expected to experience substantial growth, with their UHNWI populations projected to expand by 22.4% and 47% (the second highest growth rate globally) by 2028 respectively.
Our Attitude Survey results indicated that 4.15 out of 5 clients in Asia are optimistic about their wealth growth in 2024. Hong Kong’s wealthy individuals, with a score of 4.03 out of 5, show less optimism about their wealth growth in 2024 compared to the Asia average.
16% of the Attitude Survey respondents in Hong Kong reported that their clients purchased a home in 2023, while 18% stated that their clients are planning to buy in 2024.
The primary motivation behind home purchases for Hong Kong clients is investment.
Across Asia-Pacific, Singapore leads the regional pack with a requirement of US$5.2 million to be the top 1% wealthy population, while Hong Kong with a threshold of US$3.1 million.
Hong Kong UHNWIs allocate approximately 32% of their total wealth to primary and secondary homes, more than a quarter of these homes are situated outside of Hong Kong on average.
While UHNWIs possess an average of 3.7 homes globally, the figure is slightly lower in Hong Kong, with UHNWIs owning about 3.28 homes in Hong Kong on average.
Hong Kong’s luxury home prices have remained the second highest in the world in terms of per unit price basis for the 17th year, which has reflected its scarcity and investment potential.

Wealth Distribution

Source: The Wealth Report 2024, page 10

Ultra-wealthy population (those with a net worth of over US$30 million)

The number of ultra-high-net-worth individuals (UHNWIs) globally rose 4.2% in 2023 to 626,619 from 601,300 a year earlier. This increase more than reverses the decline witnessed in 2022.

At a regional level, North America leads with the number of UHNWIs up 7.2%, the Middle East comes in second place (6.2%) and Africa takes third place, up 3.8%. Latin America is the only region to see its population of wealthy individuals decline (-3.6%).

In terms of key country performance, Turkey leads Knight Frank’s rankings with a 9.7% expansion in UHNWI numbers, followed by the US 7.9%, India 6.1%, South Korea 5.6% and Switzerland 5.2%.

Liam Bailey, Global Head of Research at Knight Frank said: “The improving interest rate outlook, the robust performance of the US economy and a sharp uptick in equity markets helped wealth creation globally. At the end of 2023, there were 4.2% more UHNWIs than a year earlier, with nearly 70 very wealthy investors minted every day, taking the global total to just over 626,619."

Wealth forecasts

Over the next five years, Knight Frank forecasts a significant growth of 28.1% in the global population of UHNWI population, with Asia leading the way with a remarkable increase of 38.3%. Among all countries and territories, Hong Kong and the Chinese mainland are expected to experience substantial growth, with their UHNWI populations projected to expand by 22.4% and 47% (the second highest growth rate globally)by 2028 respectively.

According to the report from Knight Frank’s Wealth Sizing model, the number of wealthy individuals globally is expected to increase by 28.1% over the five years to 2028. While positive, this rate of expansion is noticeably slower than the 44% increase experienced in the five-year period to 2023. The survey also suggests that clients are optimistic about their wealth growth in 2024. The Middle East region is the most confident (4.41 out of 5), followed closely by Asia (4.15 out of 5). Hong Kong’s wealthy individuals, with a score of 4.03 out of 5, show less optimism about their wealth growth in 2024 compared to the Asia average, of which 46% think that there will only be a marginal increase of their wealth in 2024. This reflected that the overall economic uncertainty associated with the underperforming stock market and property market in Hong Kong in the past year have weighed investors’ confidence towards their potential wealth growth.

Real estate implications

Liam Bailey, Global Head of Research Knight Frank comments further, “The expanding cohort of wealthy individuals looks favourably on real estate. Almost a fifth (19%) of UHNWIs plan to invest in commercial real estate this year, while more than a fifth (22%) are planning to buy residential. Growth over the forecast period provides various opportunities for investors, particularly developers able to deliver property that suits the shifting tastes of the newly minted."

According to our Attitude Survey, 16% of respondents in Hong Kong reported that their clients purchased a home in 2023, while 18% stated that their clients are planning to buy in 2024. These figures indicate a slightly lower rate compared to the global average. The survey also highlighted that the primary motivation behind home purchases is investment. In the recently announced Budget, the Hong Kong government made significant changes by eliminating all three types of stamp duties on home sales.

Ho-Pin Tung, Director and Head of Private Office, Hong Kong adds, “This decision is particularly beneficial for international buyers, as they will no longer face additional financial burdens and selling restrictions when investing residential properties in Hong Kong. The abolition of these stamp duties is expected to enhance the attractiveness of Hong Kong to international investors and capital. Global investors will be able to better realise Hong Kong’s competitive advantages, and this will further consolidate Hong Kong’s status as a leading investment and global hub for wealth.”

Martin Wong, Director and Head of Research & Consultancy, Greater China says, “With the Hong Kong SAR Government’s recent scrapping of all cooling measures, we foresee a significant turnaround in market sentiment for the first half of 2024. We expect the policy will help bring in more global capital and drive ancillary economic activities. Residential premises will remain the most preferable property investment for UHNWIs in the Greater China region as we expect to see substantial growth in investment volume in the luxury residential segment. The new policy will entice UHNWIs from around the world to acquire the rare, super prime residential properties as their trophy assets. They will also take advantage of the discounted assets given the price decline in the past two years.”

The 1%

Source: The Wealth Report 2024, page 13

The Knight Frank Wealth Report confirms what it takes to be part of the global 1%. Our numbers reveal that exclusive as it may sound, it’s actually easier to be part of the 1% than it is to gain UHNWI status. In all the markets Knight Frank has assessed, the 1% threshold starts far below the US$30 million entry point for becoming a UHNWI.

European hubs top the list, led by Monaco, where US$12.9 million is the threshold to join the 1% club. Following behind is Luxembourg at US$10.8 million and Switzerland at US$8.5 million. Perhaps surprisingly, bearing in mind its dominance in terms of overall wealth creation, the US comes in fourth, at US$5.8 million. In the Asia-Pacific region, Singapore takes the lead with a requirement of US$5.2 million, while Hong Kong with a threshold of US$3.1 million.

Knight Frank’s Prime International Residential Index

Source: The Wealth Report 2024, page 32

Of the 100 markets tracked in Knight Frank’s Prime International Residential Index (PIRI), 80 recorded flat or positive annual price growth. Luxury prices climbed 3.1% on average in 2023 – a solid gain overall. Manila (26.3%) leads the rankings but Dubai (15.9%), last year’s frontrunner only slipped one spot. Bahamas (15%) comes in third place with the Algarve and Cape Town (both 12.3%) completing the top five.

Asia-Pacific (3.8%) pipped the Americas (3.6%) to the title of the strongest-performing world region, with Europe, the Middle East and Africa trailing (2.6%). Sun locations continue to outperform city and ski markets, up 4.7% on average. Ski resorts are close behind (3.3%) and prime prices in the city market tracked have risen 2.7% on average.

As markets adjusted to the higher cost of debt, sales took a bigger hit than prices. In London, New York, Dubai, Singapore, Hong Kong and Sydney, luxury sales declined on average by 37% year-on-year. Some markets corrected after strong falls due to rapid rate hikes (Auckland, Seoul), while others moved up the rankings in part due to supply shortages (Sydney, Singapore). Some were influenced by policy and tax shifts, easing (Hong Kong), or tightening (Los Angeles), and some markets benefited from significant wealth inflows (Dubai, Miami).

Globally, approximately 29% of total wealth is allocated to the primary and secondary homes of Ultra High Net Worth Individuals (UHNWIs). Interestingly, around 27% of respondents' residences are located outside their country of residence. Given the limited land supply in Hong Kong, where home prices tend to be higher compared to locations with larger geographies, Hong Kong UHNWIs allocate approximately 32% of their total wealth to primary and secondary homes. Moreover, it is noteworthy that more than a quarter of these homes are situated outside of Hong Kong on average. While UHNWIs possess an average of 3.7 homes globally, the figure is slightly lower in Hong Kong, with UHNWIs owning about 3.28 homes on average.

What Can You Buy for US$1 Million?

Source: The Wealth Report 2024, page 34

Knight Frank provides a guide to how much space you can buy for US$1 million on an annual basis. There is a significant variation in prime prices across luxury residential markets. Prime prices in Dubai may sit 134% higher than at the start of the pandemic but are still noticeably lower than in more established markets. Here, US$1 million buys 91 sq m, four times the equivalent in Hong Kong.

Hong Kong’s luxury home prices have remained the second highest in the world in terms of per unit price basis for the 17th year, which has reflected its scarcity and investment potential.

Maggie Lee, Senior Director, Head of Residential Agency, Hong Kong says, the Hong Kong luxury home market has remained resilient over the past couple of years amid economic headwinds and high interest rate environment. Given the removal of all cooling measures, we expect sales activity for the luxury home market to pick up, given the limited supply but robust demand going forward. The tangible nature of rarity of the super prime residential properties continues to have great investment appeal. Looking ahead to 2024, we expect a modest increase of 0.5% in prime prices.

Click here to download the report.