The rich are getting richer but it is the traditional property that appears to be driving returns rather than the luxury market.
Many households were boosted by rising house prices, falling inflation and lower interest rates last year and this has also benefited the wealthy.
Research by consultancy brand Knight Frank shows the number of high-net-worth individuals (HNWIs) – those with more than US$10 million in assets – globally rose by 4.4% in 2024.
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The population of individuals worth at least $100 million climbed 4.2%, surpassing the 100,000 mark for the first time, Knight Frank said.
But it wasn’t luxury or passion investments such as classic cars driving returns. In fact Knight Frank’s latest Wealth Report showed its Luxury Investment Index actually fell 3.3% last year.
Instead, a rebound in the stock market, the rise of Bitcoin and prime property markets has benefited the rich.
How many high net worth individuals are there?
According to Knight Frank estimates, there are now 2.34 million HNWIs across the world.
While North America leads in HNWI numbers this year – up 5.2% – growth was recorded across all world regions.
Asia saw the second highest increase at 5%, followed by Africa at 4.7%. Australasia was at 3.9%, the Middle East at 2.7%, Latin America at 1.5% and Europe at 1.4%.
The US is home to almost 39% of all HNWIs, according to Knight Frank, almost twice the level of China. In the $100 million-plus bracket, the figure rises to over 40%.
Liam Bailey, global head of research at Knight Frank, said: “While the global economy slowed through 2024, the resilience of the US helped prop up investor confidence.
“The trends powering wealth creation, including growth in financial markets led by equity markets and the bitcoin run, continued through 2024. And despite geopolitical tensions, resilient global trade further contributed to growth.”
See how your net worth compares to peers in our average net worth by age guide.
Where are the wealthy making their money?
The equity markets, helped by the technology boom in the US, have given the portfolios of HNWIs a boost.
Cryptocurrency investors have also benefited from the Bitcoin price hitting a record high.
But the prime property market has also had a resurgence.
Prime residential prices rose 3.6% annually last year, up from 3.3% in 2023.
Of the 100 markets tracked in Knight Frank’s Prime International Residential Index, 77 recorded positive annual price growth.
Asian and Middle Eastern markets dominated, with average prime prices up 18.4% in Seoul, 17.9% in Manilla and 16.9% in Dubai.
Saudi Arabian property markets also performed strongly this year, with average prices in Riyadh up 16% and Jeddah rising 9.6%.
Meanwhile, the Knight Frank Luxury Investment Index (KFLII), which tracks the performance of 10 popular investments of passion, actually fell for the second year in a row, declining by 3.3%.
Only five out of the 10 collectibles sectors tracked managed growth in 2024, even for the top performers the uptick was modest.
Handbags were the best performing luxury asset class with prices marginally rising 2.8% in 2024.
The usually popular classic cars sector grew by just 1.2%.
The weakest sectors were fine art, wine and whisky.
Art was down 18.3%, Knight Frank said, while fine wine and rare whisky values fell by 9.1% and 9% respectively.
This was blamed on changing consumption patterns and increased supply.
But Bailey said luxury collectibles have delivered for investors over the long term.
He added: “If you had invested US$1 million in 2005 and tracked KFLII, your investment would now be worth US$5.4 million. The same amount invested in the S&P 500 would have been worth US$5 million by the end of 2024.
“Unsurprisingly, the luxury sector weathered the global financial crisis better than financial investments, and with the ability to leverage these investments through financing, the boom for collectibles lasted for well over a decade from 2008. While it took equities several years to catch up, the past decade, and the past five years in particular, has seen a consistent pattern of stronger returns from the financial sector.”
|
Asset class |
12-month price change (%) |
10-year price change (%) |
|---|---|---|
|
KFLII |
-3.3 |
72.6 |
|
Handbags |
2.8 |
85.5 |
|
Jewellery |
2.3 |
33.5 |
|
Coins |
2.1 |
47.5 |
|
Watches |
1.7 |
125.1 |
|
Cars |
1.2 |
58.9 |
|
Coloured diamonds |
-2.2 |
3.8 |
|
Furniture |
-2.8 |
140.9 |
|
Whisky |
-9.0 |
191.7 |
|
Wine |
-9.1 |
37.4 |
|
Art |
-18.3 |
54 |
