Number of high-net-worth individuals in South Africa to balloon over the next decade

24 May 2018 Authored by Consultancy.co.za

Having navigated a major dip between 2014 and 2015, the volume of private wealth in South Africa is back on a steady growth trajectory, which is expected to continue over the next decade. A new report places the number of high net worth individuals (HNWIs) in the country at over 43,500 at the end of last year.

The year between 2014 and 2015 was a challenging one for South Africa in most respects of its economic well-being. Global oil and commodity prices took a nosedive, which spelled trouble for South Africa, given its dependence on the mining and natural resources sector. Alongside impacting the GDP, the overall economic slowdown appears to have affected the country’s wealthiest segment as well.

New World Wealth is a Johannesburg-based market research and consulting firm that offers a range of analytical services. The firm bases its insights on a number of studies and surveys spanning the domains of regional wealth and migration, management consulting, safety, and residential property.

South Africa HNWI performance 2007-2027

In terms of its analysis on regional wealth patterns, the firm conducts studies in 125 cities worldwide, covering 90 countries. By its own declaration, the firm uses private wealth as a determinant of economic performance – primarily due to the distortions and generalisations that are inherent in using GDP as the key indicator.

According to New World Wealth’s analysis of South Africa’s private wealth levels between 2007 and 2017, the number of HNWIs – individuals with private wealth of over $1 million – has remained steadily above the 40,000 mark, dipping into the 30,000s on only two occasions, first in 2008 post the Global Financial Crisis and then in 2015 following the dip in oil prices. 

Since 2015, things have taken an upward turn again, with the number of HNWIs going up to just over 40,000 in 2016, and surpassing 43,500 in 2017. Based on the firm’s analysis, this figure will continue to rise over the next decade through to 2027, expected to reach a total of 56,000 HNWIs.

South Africa HNWIs distribution by industry 2017

The report attributes this growth to a number of features that make South Africa an attractive place for the wealthier segments to reside. These include advanced facilities in the healthcare and education domains, widespread proficiency in English, a well-developed luxury brands market, the prevalence of private security companies, and a range of others.

Zooming in, Johannesburg is home to the highest number of HNWIs (18,400) by a fair distance, cumulatively accounting for $276 billion. The city’s figures are driven up by the inclusion within its statistics of the economically prosperous Sandton district. Cape Town follows with 8,300 HNWI residents, while all other surveyed districts fall below the 5,000 mark. 

South Africa’ business advisory market, which is worth over R70 billion, is the biggest sector in terms of HNWIs. Financial & Professional services account for nearly 27% of the total HNWIs in the country, followed by Real Estate & Construction, which hosts nearly 20% of the wealthy. All other sectors account for less than 10% each of the HNWIs, the biggest of which include Tech & Telecom – which is growing in relevance by the day – basic materials, and retail. 

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