It should come as no surprise to anyone that the wealthy continued to indulge in life’s luxuries, despite the global pandemic. However, their preferences and buying habits are subtly changing.
These changing habits have now been evidenced by Wealth-X, a provider of data and insight on the wealthy, in its first Global Luxury Outlook. The 2020 release highlights how high-net-worth individuals have embraced online shopping for luxury services in the privacy of their homes.
It’s also probably not a surprise that over the last 15 years, the size of the world’s wealthy population has continuously increased, with the number of global millionaires (with over US$1 million in net worth) doubling to more than 25 million individuals.
Wealth-X’s report focuses on two wealth tiers: the very-high-net-worth individuals (VHNW, with wealth of US$5 million to US$30 million) and the ultra-high-net-worth individuals (UHNW, with wealth of over US$30 million).
In 2019, it estimates there were almost 2.7 million VHNWs and over 290,000 UHNWs around the world. North America had the highest density of wealth, with almost 40% of VHNW and UHNW individuals based there, while Asia (with 27%) has now overtaken Europe (25%) to take second place.
Despite Asia’s huge rise in wealth over the last 10 years, and the associated growth in demand for luxury goods, Europe and North America remain the leading global centres of luxury consumption. In part, this reflects the global mobility of the wealthy, particularly Chinese consumers.
As the wealth has grown, the global demand for luxury goods and services has diversified and expanded too, increasing from an estimated US$175 billion in 2005 to US$1.5 trillion in 2019¹.
2020’s pandemic, the uncertainty and lockdowns, however, have dampened that growth and led to huge changes in consumer attitudes and behaviour around the world.
Living with the pandemic has prompted many people to review their priorities and the wealthy are no exception. The health and safety of family and close friends has become a focus, and has led to an increased demand for more intangible assets, such as additional passports and citizenships, as well as on-demand healthcare2.
Meanwhile, more high-end providers have enhanced their digital offerings. The wealthy have become more accustomed to purchasing online and having high levels of luxury delivered to their door. Restaurants now offer dine-at-home options and home delivery of high quality ingredients. Auction houses are now focused on virtual auctions and have reported “eye-catching” growth in online sales3.
The comforts of home have never been more important for everyone. As such, high-end properties in rural locations have been more in demand, as the wealthy seek out safety and security away from the cities. The private jet market has also held its own versus commercial airlines given the ease for social distancing.
The report concludes that the wealthy, and their luxury lifestyles, have not been immune to the pandemic, but they have been quick to adapt to their new circumstances – their preferences and demands have evolved2.
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Sources: (1) Bain & Company; (2) Wealth X; and (3) Financial Times.
Any examples of investments and structures used are for illustrative purposes only. The information does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.
Allie joined Nedbank Private Wealth in 2006 and manages a select portfolio of high-net-worth clients. Working closely with their professional advisers, she provides services tailored to their specific financial needs; these include wealth management, succession planning, pensions, lending and banking services. In addition, she acts as an investment adviser to various pension schemes and trusts.
Allie is a Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
Allie joined Nedbank Private Wealth in 2006 and manages a select portfolio of high-net-worth clients. Working closely with their professional advisers, she provides services tailored to their specific financial needs; these include wealth management, succession planning, pensions, lending and banking services. In addition, she acts as an investment adviser to various pension schemes and trusts.
Allie is a Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
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