Pandemic no brake on rise of the ultra-wealthy: Knight Frank

The number of Australians with a net wealth of at least $US30m jumped 10pc last year, as ranks of the rich shrank globally.

Over the last five years the ranks of the ultra-wealthy in Australia have grown by 56.6 per cent, beating global trends.

The number of Australians classed as ultra-wealthy leapt by 10 per cent last year, with the surging luxury property market and rebounding share market driving the rise.

The country’s status as a safe haven during the pandemic, which drew wealthy expats home, also helped Australia add to its population of ultra-wealthy people at four-and-a-half times the rate of the rest of the world in 2020.

And despite the worst economic downturn in Australia since the Great Depression, there are now an estimated 3124 Australians with an accumulated net wealth of at least $U$30m, according to a global report compiled by real estate agents Knight Frank.

The report shows the pandemic appears to have only briefly interrupted the rise of a local class of wealthy business owners and investors.

Over the last five years the ranks of the ultra-wealthy have grown by 56.6 per cent, beating global trends, where the economic crisis has cut deeper.

The firm’s head of residential research Australia, Michelle Ciesielski, said Sydney had the highest share of both ultra-high-net-worth (UHNW) people – with about one third – and about one quarter of high-net-worth (HNW) people, classed as those with net wealth of $US1m.

Sydney was followed by Melbourne, Perth then Brisbane.

Wealth is concentrated in the cities even as some wealthy people have shifted to coastal areas like Victoria’s Mornington Peninsula to escape the worst of the pandemic.

“Our four major capital cities of Australia comprise 74 per cent of the ultra-high-net-worth population and 66 per cent of the high-net-worth population,” she said.

Ms Ciesielski said Australia had continued to see solid growth in its ultra-wealthy population in 2020, despite the pandemic plunging Australia into a recession for the first time in nearly 30 years.

“Although we headed into an uncharted pandemic in the second quarter of 2020, by the end of the year there was strong recovery in both the stock and property markets whilst being in an extraordinarily low interest rate environment, ideal for business investment,” she said.

Recession? What recession? The pandemic barely caused a blip in some Australians’ rise to “ultra-wealth”. .

Knight Frank warned that Australia’s strong growth in wealth could taper off while borders are shut.

“Compared to well-established countries and territories, the creation of new Australian UHNW and HNW is coming off a relatively low base, so whilst international borders remained closed to new wealthy migrants, projected growth in this population is likely to taper back over the next five years,” Ms Ciesielski said.

Even so, more Australians are expected to join the ranks of the ultra-wealthy over the next five years, with about 3760 people expected to accumulate this kind of wealth by 2025.

Further down the scale, Knight Frank revealed the number of millionaires with a net wealth of $US1m or more was up by 5.9 per cent to 176,862 in 2020.

Some industries, like technology and logistics, and select professions, also remained in demand during the crisis as white collar job cuts were restricted.

Australia stands in stark contrast to the deep economic toll COVID-19 has taken on the upper and middle wealth ranks of Europe and the US, with the virus driving an 8.4 per cent drop in the global population of millionaires.

Knight Frank found the growth of Australian ultra-high-net-worth individuals ranked eighth globally, while the domestic growth of high-net-worth individuals ranked third from 44 countries reviewed.

Most wealthy Australians are chasing new investments and see technological disruption as an opportunity, but they are worried about ongoing disruption from COVID-19 and geopolitical issues, including trade wars.

Getting into the top one per cent of the population by wealth is also getting harder, with Australians needing $US2.8m to qualify.

“This saw Australia ranked seventh globally, by the amount of wealth required, behind countries and territories such as Monaco, Switzerland, the United States, Singapore, New Zealand and Hong Kong,” Ms Ciesielski said.