The world of ultra-luxury real estate is on the brink of a remarkable transformation, set to unfold over the next decade. A recently released 2023 Centi-Millionaire Report, in collaboration with wealth and investment migration advisors Henley & Partners and global wealth intelligence firm New World Wealth, reveals intriguing insights into the future of the real estate market for the super-wealthy.
The report predicts a staggering 38% increase in centi-millionaires worldwide within the next ten years, bringing with them a surge in demand for trophy homes, secondary residences, and investment properties in the world's most coveted markets.
The Elite Centi-Millionaire Club
To begin, let's address the question that has captivated minds for generations: How much money does one need to be 'super-wealthy'? In today's context, that figure stands at an impressive USD 100 million, categorizing individuals as 'centi-millionaires.' These exclusive members of the financial elite typically include founders of multinational conglomerates and heirs to vast family fortunes. As of June 2023, there are only 28,420 centi-millionaires worldwide, a testament to the exclusivity of this club.
Notably, the ranks of centi-millionaires have swelled by a remarkable 12% compared to the previous year. This data is a central finding of the 2023 Centi-Millionaire Report, shedding light on the evolving landscape of extreme wealth.
The Geographic Concentration
The Top 10 Cities for Centi-Millionaires in the World (Source: Henley & Partners)
Approximately one-third of the world's centi-millionaires have clustered in 50 key cities across the globe. These cities represent the epitome of opulence, offering a unique blend of lifestyle advantages, stable currencies, and secure investment prospects. New York City reigns supreme in this regard, with a staggering 775 resident centi-millionaires calling it home.
The shift in the wealth landscape, as indicated by the report, highlights the trend of centi-millionaires favoring urban hubs that cater to their tastes and needs. For many, these cities provide the ideal backdrop for their extravagant real estate ventures.
The Evolution of Super-Wealth
Dr. Juerg Steffen, CEO of Henley & Partners, presents an interesting perspective on the definition of 'super-wealthy' in today's world. He asserts that "Not long ago, in the late 1990s, USD 30 million was considered by most banks as the fortune that was needed to meet this status. However, asset prices have risen significantly since then, making USD 100 million the new benchmark."
The increase in this threshold for super-wealth is indicative of the ever-evolving global economic landscape and the value attributed to wealth. It is a testament to the extraordinary growth in asset prices and the emergence of new opportunities for the financial elite.
The Centi-Millionaire Band as an Accurate Reflection
Andrew Amoils, Head of Research at New World Wealth, further underscores the significance of the centi-millionaire band in assessing the super-wealthy community, particularly in emerging market countries. He notes that "in a large number of emerging market countries, there are very few billionaires, which makes the billionaire wealth band largely irrelevant. However, these same countries often have large numbers of centi-millionaires. For instance, Kenya has no billionaires but has 15 centi-millionaires, while South Africa has only 5 billionaires but boasts 102 centi-millionaires. The centi-millionaire wealth band is, therefore, a far more accurate reflection of the 'super-wealthy' community in these countries."
Top 10 African Cities for Centi-millionaires (Source: Henley & Partners)
This observation brings to the forefront the shifting dynamics of wealth distribution in emerging markets. While the billionaire category may not adequately capture the extent of super-wealth in these regions, the prominence of centi-millionaires reflects a more accurate depiction of their financial elite. It is a testament to the broadening spectrum of wealth and the promise of more equitable global prosperity.
The Future of Ultra-Luxury Real Estate
As centi-millionaires multiply in number and continue to shape the landscape of global wealth, the ultra-luxury real estate market is poised for significant changes. Their growing demand for trophy homes, second and third residences, and investment properties will undoubtedly redefine the concept of opulence in real estate.
Real estate, as the world's largest asset class, is positioned as the prime choice for these discerning investors. Despite minor fluctuations and corrections, residential real estate has consistently proven its dependability and desirability. It's not just about seeking a safe haven with stable currencies but also the lifestyle advantages that come with residing in the world's most sought-after markets.
Luxury homes in South Africa
South Africa is home to 37 800 millionaires each with wealth of USD 1 million or more, 98 centri-millionaires each boasting with wealth of USD 100 million or more, and five billionaires each with wealth of USD 1 billion or more.
The wealthiest cities are topped by Johannesburg, with 14 600 millionaires, 30 centi-millionaires, and two billionaires. It is worth noting that over the last decade, Johannesburg has seen negative millionaire growth, falling 40% since 2012.
Hyde Park, Sandhurst, and Westcliff are among Johannesburg’s most exclusive suburbs. There are also numerous lifestyle estates on the outskirts of the city that are tailored to the super-wealthy, including Dainfern, Steyn City, and Waterfall Equestrian Estate.
It comes as no surprise that the top performing areas are all in Cape Town, more specifically on the Atlantic Seaboard. However, the square meter prices in certain parts of Hermanus and Plettenberg Bay are beginning to catch up with those in the Mother City.
The most affluent suburbs of Cape Town include Bakoven, Bantry Bay, Bishopscourt, Camps Bay, Clifton, Constantia, Fresnaye, and Llandudno. Slightly further afield, there are also significant numbers of wealthy individuals residing in Somerset West, St. James, and Tokai.
The Cape Winelands is a picturesque region that includes the towns of Paarl, Franschhoek, and Stellenbosch. There are several exclusive lifestyle estates in this area, including Val de Vie, De Zalze, Domaine des Anges, and Winelands Estate. Many of the wine farms in the area are owned by wealthy individuals, who often retire there.
