In their first monthly Wealth Report for Luxury Society members, Marc Cohen, Director of Ledbury Research, a London-based research agency and James Lawson, Editor of High Net Worth, the agency’s flagship publication, report on the evolving state of world wealth.
UK Quarterly Growth (HNW and UHNW) – Source: MDRC
Since 1996 over 60% of HNW growth has been driven by property development and sophisticated financial services (MDRC). However, with both these sectors suffering, the HNW sector has felt the impact. The number of HNWIs (between £500,000 and £5m in investable assets) fell by 106,000 in 2008 to 465,000 in January this year (-19%). This decline was the largest annual decline since 1980. Furthermore, the financial assets held by these individuals fell by 17%. The affluent market (between £100,000 and £500,000 in investable assets) fared slightly better with numbers falling only by 11%; in contrast, the number of UHNWIs (over £5m in investable assets) fell by 31%, with their financial assets falling by 33%. The HNW sector is expected to return to modest growth in 2010 but will not fully recover until at least 2012.
After experiencing a six-year boom that turned it into a luxury city, Dubai is now in crisis (Guardian). The real estate bubble that drove the rapid expansion of Dubai on the back of borrowed cash and speculative investment has now burst. Half of all the UAE’s construction projects, totalling $582bn, have either been put on hold or cancelled. Among these projects are the Donald Trump tower, a $100bn beach resort complex, an artificial island and four theme parks. Although the city remains a haven for wealthy sheikhs, billionaire hedge fund managers and Russian oligarchs, banks have stopped lending and the stock market has fallen by 70%. Luxury hotels are three-quarters empty and newly built malls are reporting a drop in sales. Expatriate bankers, lawyers and architects are being let go, although the exact number is not known as the Dubai government does not release figures and prevents the press from running stories which may damage the economy; employees who lose their jobs in the UAE automatically have their visa rescinded and have thirty days to leave the country. Hundreds of luxury cars have been abandoned at the airport, with maxed-out credit cards and apology letters in the glove compartment.
Capital Raised by China’s Offshore IPOs ($m) – Source: Boston Consulting Group
There are two major groups of potential wealth management clients in China: established entrepreneurs and emerging entrepreneurs (Boston Consulting Group). Established entrepreneurs already generated substantial wealth through IPOs, and emerging entrepreneurs are still building their businesses. The former generally have more wealth than the latter and tend to be interested in global investments and offshore opportunities. Indeed, the growing wealth in China stems in part from the surge of offshore IPOs of Chinese companies (see chart above). Emerging entrepreneurs prefer to hold their wealth in onshore investments and generally divide their AuM among real estate, liquid financial investments and their businesses.
Source of Entrepreneurial Wealth Over Time – Source: " target=“_blank” title=“http://www.wealthmonitor.com__”>wealthmonitor.com
Ledbury recently looked at entrepreneurial activity and how entrepreneurial wealth was made (High Net Worth Sep 2008). In 2007 and 2008, the top source of entrepreneurial wealth was Telecommunications, Media and Technology, with 21% of entrepreneurs involved in this sector in 2007, and 18% last year. Although still a major source, it has been decreasing over time and has now been surpassed by the Consumer sector (food and retail) which counts 17% of wealthy entrepreneurs. The Financial Services and Energy sectors are seeing an increasing amount of entrepreneurial wealth being made: entrepreneurs in Finance increased from 9% in 2007 to 13% today, and in Energy from 1% in 2007 to 7% today. These figures were obtained from wealthmonitor, the financial news service.
Top Ten Green Investors Globally – Source: Sunday Times
Following the significant amount (nearly £267bn) that the world’s wealthiest tycoons have invested in green technology and businesses, the first ever Sunday Times Green Rich List has been compiled. The top of the list is dominated by America’s wealthiest financiers and entrepreneurs who are chasing smarter and greener technologies, whilst towards the bottom of the list there are more Asian entrepreneurs who are more interested in mass production of green technologies, namely solar and electric-car technology. The table to the right shows the top 10 green investors.