WEALTH

Money, money, money

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According to the South Africa Wealth Review 2016 report published by New World Wealth in association with MasterCard, the number of Ultra High Net Worth Individuals (UHNWI) in South Africa has increased 18 percent since 2007.

The report, presented at a World MasterCard and World Elite MasterCard event, reveals that there are 620 UHNWIs in South Africa, each holding net assets of US$30 million or more. The UHNWI population held US$73 billion in wealth at the end of 2015, up by 40 percent from the US$52 billion they had in 2007.

This is in contrast to South Africa’s High Net Worth Individuals (HNWI), each holding net assets of US$1 million or more, who saw a decline in wealth from US$168 billion in 2007 to US$159 billion in 2015. The number of individuals in this category declined 10 percent from approximately 42 800 HNWI in 2007 to 38 500 in 2015.

The report explores the UHNWI and HNWI populations over an eight year period between the end of 2007 (the peak before the global financial crisis) and the end of 2015. It provides information on demographic trends and spending habits a based on a sample of 1,800 local HNWIs.

“Insights and trends from the report emphasize that affluent consumer values are evolving from the material to the experiential, and this drives new and different expectations.Today, affluent consumers want their credit card to provide recognition and exclusivity, preferential access and treatment, as well as global acceptance and exceptional service,” says Mark Elliott, Division President, MasterCard, South Africa.

“Our World MasterCard and World Elite MasterCard payment cards provide flexibility, security and convenience that brings consumers an enticing range of privileges, unique experiences and valuable offers to suit their lifestyle and business needs,” says Elliott.

According to Andrew Amoils, Head of Research at New World Wealth, UHNWIs are usually big business owners, whereas HNWIs have typically built their wealth through professional careers, as attorneys, chartered accountants or doctors for example – or they own a family business.

“While many HNWIs are choosing to leave South Africa and have most of their assets tied up in local property and equities, Ultra High Net Worth Individuals are staying in the country, possibly because of their business interests in the country. The increase of this population can be attributed to the fact that they tend to hold more assets offshore, which acts as a currency hedge, and they are often involved in multiple businesses,” says Amoils.

When it comes to the spending habits of South Africa’s wealthy, the report found that collectables are growing in popularity, with classic cars, wine and art topping their investment preferences. For example, the most expensive car purchased by a South African collector during 2015 was a Ferrari 250 GTO from the 1960s that was purchased for US$24 million. Other popular collectables include top-end men’s watches and rare wild animals such as buffalo, roan- and sable antelope that can fetch over US$20 million per animal.

A second home is another investment preferred by the wealthy. According to the report, Plettenberg Bay is the most popular location for the super-wealthy to own a holiday residence, closely followed by Umhlanga, La Lucia and Knysna. Up and coming hotspots are less well-known but as appealing, with Zinkwazi, Gretyon, Tulbagh and Keurbooms, which all offer more privacy than the traditional coastal holiday destinations.

When the wealthy are not visiting their second homes, their most preferred local holiday destinations include Cape Town, Umhlanga, Ballito, the Cape Winelands and the Kruger National Park. Internationally, Mauritius, the Seychelles, and the Okavango Delta are popular warm-weather destinations, while skiing in Switzerland tops the list for cold-weather recreation.

“Knowing where affluent individuals travel, understanding their spending habits and being aware of their preferences provides valuable insights into the wealth segment, allowing us to create new, differentiated payment card solutions to meet their needs,” says Elliott.

MasterCard commissioned the South Africa Wealth Review 2016 report as part of the unveiling of its latest World MasterCard and World Elite MasterCard benefits and the launch of the MasterCard For You mobile app, which took place at an event in Johannesburg on 6 April 2016.

HNWI wealth band and group definitions

Wealth band 

  • Billionaires: Billionaires are those HNWIs with net assets of US$1 billion or more
  • Centimillionaires: Centimillionaires are those HNWIs with net assets of between US$100 million and US$1 billion
  • Affluent millionaires: Affluent millionaires are those HNWIs with net assets of between US$30 million and US$100 million
  • Mid-Tier millionaires: Mid-tier millionaires are those HNWIs with net assets of between US$5 million and US$30 million
  • Lower-tier millionaires: Lower-tier millionaires are those HNWIs with net assets of between US$1 million and US$5 million


Wealth group

  • HNWIs (millionaires): Those individuals with net assets of US$1 million or more
  •  UHNWIs: Those individuals with net assets of US$30 million or more
  •  Multi-millionaires: Those individuals with net assets of US$10 million or more (i.e. double digit millionaires)
  •  Core HNWIs: Those individuals with net assets of between US$1 million and US$30 million
  •  Mass Affluent: Those individuals with net assets of between US$100,000 and US$1 million

 
Note: ‘Net assets’ exclude value of individual’s primary residence. They include all other assets. (Source: New World Wealth)        

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