The latest Wealth Report from Knight Frank points to a strong growth in ultra high net worth in Brazil where the number of millionaires rose over a quarter during 2017. The report expects a similar rise over the next four years with Brazil taking centre stage on the wealth platform in Latin America.
Global net worth rises
In their Wealth Report for 2018, Knight Frank reveals that the world’s ultra high net worth individuals increased by 10% between Q4 2016 and Q4 last year. This brings the total number of people whose assets exceed US$50 million to 129,730.
The reasons behind the rise was the strong economic performance across the globe. “2017 was a year when the economic stars aligned,” says the Report, with healthy growth seen practically everywhere.
Brazil leads Latin America
The change in economic fortunes is clearly visible in Latin America where according to Knight Frank, the number of ultra-wealthy individuals will rise by 30% over the next five years. Brazil, “the biggest wealth hub in the region”, also experienced a marked increase.
In figures, the number of people with assets worth over US$5 million went up by 28% between 2016 and 2017. The same percentage applies to ultra high net worth in Brazil where the individuals worth over US$50 million rose from 1,870 to 2,390. The so-called demi-billionaires (those with assets worth over US$500 million) went up by 18%.
The future looks bright for ultra high net worth in Brazil too. Knight Frank predicts a 26% rise for both the number of individuals with over US$5 million and over US$50 million. In the case of demi-billionaires, the increase is forecast to exceed 30%.
Commenting on Brazil specifically, the Report said that “it’s largely an economic recovery story. The stock and bond markets have performed extraordinarily well this past year. While the ultra-wealthy took a hit in 2016, there was a clear rebound in 2017.”
Sao Paulo property
Property counts as a preferred asset in any ultra high net worth portfolio and Sao Paulo property features as one of the markets covered in the Wealth Report 2018. It reports that prices rose in the city by 2.2% in the year to Q4 2017.
Sao Paulo offers the best value for prime property in the Report, which looks at how much space you can buy for US$1 million in the world’s top markets. In the Brazilian financial capital, US$1 million buys 137 square metres against the most expensive (Monaco) where the same sum buys just 16 square metres.
Latin America property forecast
Judging by the forecast for property purchases this year, the ultra high net worth in Brazil will be investing in real estate. The Report looks at the number of wealthy individuals planning to buy a new home in 2018. In Latin America, 24% intend to purchase property in their home country and 28% plan to buy one abroad.
Latin American millionaires are among the world’s biggest homeowners. On average, they own 2.9 first and second homes while those in Europe and North America own 2.7.
New horizon for managed property
The Wealth Report finishes with a conclusion from Liam Bailey, Global Head of Research at the company. He assesses the current global property situation in the context of rising interest rates. “There will undoubtedly be changes to market behaviour,” says Bailey, “it will become harder to generate exciting returns”.
He predicts that “added value through active management of property” will become even more sought-after. He adds that real estate has one big advantage over other assets – “the ability to influence returns through improvements, development and leasing strategy”.
The ultra high net worth in Brazil already has its eye on property management. Buy-to-let real estate is increasingly popular along with part ownership of holiday rentals, attractive options because of their potential for high return.
(Source: Knight Frank)