Australia sealed its borders for the best part of two years, and its anti-pandemic policies have been harsh. But it appears that the wealth of ultra-HNW individuals in the country has kept growing, and is set to continue.

The population of ultra-high net worth individuals in Australia, defined by those with a net worth of $30 million-plus, continues to grow in Australia, figures show, suggesting that a country with some of the toughest anti-COVID-19 restrictions hasn’t blunted its affluence yet.

Figures from Knight Frank, issued yesterday, showed that the wealth amassed by Australian UHNWIs stood at more than $863 billion and is due to surpass A$1.1 trillion by 2026. Australia’s UHNW population is on an upward trend and growing fast, increasing by 124 per cent over the last five years, well ahead of global growth of 75 per cent, the property consultancy and agency said in its annual report on wealth trends. (Full details for the globe are scheduled to be issued on 2 March; details were not available as of the time of going to press).

In the ten years from 2016 to 2026, the UHNW population across the globe will more than double from 348,355 to 784,671, with Asia surpassing Europe as the second largest wealth hub in this time.

“Over 2021 alone, Australia’s UHNW population grew by 10.1 per cent to 20,874 people, compared to 9.3 per cent globally,” Knight Frank Australia head of residential research, Michelle Ciesielski, said. “Our wealth model predicts growth of 31 per cent for this population over the next five years to 27,330 people, with the billionaire population of Australia expected to grow by a further 37 per cent over this time. It’s extraordinary to see such momentum in the growth of our UHNW sector in an economy and population of Australia’s size.”

Such figures come at a time when Australia, like its neighbour New Zealand, and countries in the Pacific Rim, are working to recover from more than two years of harsh measures to contain the pandemic. Australia’s controls have been among some of the toughest in the world’s major democracies, to the consternation of some. 

Central bank money printing, carried out to shore up financial systems as the pandemic struck, has helped underpin equities and other assets, while arguably helping to trigger inflation and eventually, higher borrowing costs. Time will tell how the fortunes of UHNW individuals are affected by the changing macroeconomic environment. 

“The onset of the COVID-19 pandemic in 2020 led to an unprecedented amassing of savings across Australia’s population, which enabled significant investment upside over the last 12 months. We predict that 2022 will be a record year for global cross-border investment, when investors will have the opportunity to rebalance portfolios, execute business plans and implement strategic goals,” Knight Frank Australia chief economist, Ben Burston, said.

“The last year has been a record 12 months for private capital investment into commercial real estate, too. Real estate remains a cornerstone of many UHNW individual investment portfolios, occupying a unique position somewhere between bonds and equities where it enjoys the upside of rising rents and values in times of economic expansion, but also security during times of volatility. It’s likely that we will see eco-investing, inflation and asset rotation as the key investment drivers for commercial property investment this year,” she said. 

“On average, 37 per cent of Australian UHNW individuals’ investable wealth is allocated directly to commercial property. This investment has traditionally flowed largely into the major sectors – offices, retail and industrial – but private investors are increasingly seeking diversification into emerging sectors such as healthcare, data centres and agricultural land,” she said. 

Perhaps, inevitably, crypto assets such as bitcoin get a mention. Some 27 per cent of UHNW individuals in Australia partake of such investments, versus a global average of 18 per cent.

Threats
Disruptions to global supply chains is the leading threat to their wealth, the report said. Some 69 per cent of UHNW individuals agreed, followed by citing new variants of COVID-19 (65 per cent).

“The greatest opportunities that UHNW individuals have identified to grow their wealth in 2022 are in private equity, venture capital and technological adoption first and foremost, followed by real estate. We may see pushback on the growth of wealth in this UHNW individual class, with policy responses such as wealth taxation implemented to tackle the increasing inequality. However, governments will be conscious of pushing wealth out of their economies with an over zealous regulatory approach,” Ciesielski said.