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What Trends Will Shape Wealth Creation in 2019?

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As global markets shift and political events shape the landscape, wealth creation trends will remain steady during 2019. The population of ultra-high-net-worth individuals (UHNWI) is also set to increase by 22% over the next five years. This translates to roughly 43,000 more people worth $30 million around the world.

In the UK market, regardless of Brexit, London will take the top spot as the global wealth centre in 2019. With the world’s largest UHNWI population, the capital has pushed its nearest rival New York into second place, cementing it as the global hub for wealth creation.

On the other side of the world, Asia’s incredible economic performance means that 2019 will be the year that the number of millionaires will exceed 20 million for the first time. Across the continent, India leads the way with growth of 39%, followed by the Philippines (38%) and China (35%).

Despite some countries introducing new ‘hoops’ for overseas investors to jump through, the wealthy are continuing to diversify across global markets with nearly 26% of the world’s UHNWI’s planning to emigrate. During 2019, expect to see some countries offering residency through investment schemes.

2019 Trends That Will Shape Wealth Creation

As we race towards the halfway point of 2019, the wealth creation trends that were predicted to shape the global economy in 2018 are still having a significant impact. Whether it’s huge geopolitical events such as Brexit or the rising volatility of the financial market in certain hotspots, these trends will be joined by other changes on the horizon:

Recession Potential

Downturns generally occur because of a surplus of excess developing within the economy. During 2018, several asset classes jumped up in value including cryptocurrency and technology shares. While these eventually self-corrected their respective courses, this has led to some experts predicting an upcoming recession, fitting with the theory that a recession occurs every 10 years or so. For investors, this represents an opportunity to take a long-term view. Could returns be made on UK property that has accumulated ‘Brexit discounts’?

The Rise of Scandanavia

It’s no surprise that the planned departure of the UK from the EU trade bloc is already having an effect on internal politics. While the UK has always traditionally appealed to offshore investors because of its stability and ‘safe haven’ attributes, countries such as Denmark, Sweden and Finland also generally have these characteristics, potentially putting them in the spotlight as up-and-coming investment destinations – particularly for Europe’s tech scene.

Political Unrest

While major geopolitical events have brought uncertainty, they’ve also delivered a ‘new wave of populism’, street movements and demonstrations that have no discernible leadership and yet engage with the government on political and social issues. For UHNWI, this could be the turning point for prioritising more ‘stable’ locations for investment – locations such as Switzerland and Singapore that traditionally demonstrate a stable market.

With this in mind, what are the most popular property investments for high-net-worth-individuals across the world? We know that investors are looking to overseas markets that offer more stability but what asset classes are the most popular in property? And in addition, what is ‘private capital’ investing in?

What are the most popular property investments in 2019? (Investment volumes by sector)

Commercial: £330bn

Apartment: £202bn

Retail: £153bn

Industrial: £140bn

Hotel: £62bn

Senior Housing and Care: £20bn

What does Private Capital invest in?

Apartment: 35%

Commercial: 29%

Retail: 15%

Industrial & Logistics: 11%

Hotel: 8%

Senior Housing & Care: 2%

In a survey of wealth managers by Knight Frank, respondents also listed their top potential investment destinations, which saw some changes to the top five locations across the globe. For European investors, the US, France and the UK took the top 3 spots respectively, while the Middle East and Africa cited the UK as their chosen investment destination. Across the global average, the following countries were the top investment locations:

  1. US
  2. UK
  3. Spain
  4. Australia
  5. France

This shows that despite political uncertainty and the trends listed above, Western investment locations are predicted to be more popular in 2019, driven by the stability of the market and the economic strength of multiple cities within these countries.

Data Source: Knight Frank Wealth Report

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