A significant number of wealthy South Africans have left the country

Data from New World Wealth and AfrAsia Bank shows the latest trends in the movement of high net worth individuals (HNWIs) around the world, including which countries are losing the most millionaires, and where they’re settling.

The group said that wealth migration figures are important metrics to gauge of the health of an economy, while HNWIs are defined as dollar millionaires, or those individuals with wealth of US$1 million or more.

“If a country is losing a large number of HNWIs to migration, it is probably due to serious problems in that country – i.e. crime, lack of business opportunities etc. It can also be a sign of bad things to come as HNWIs are often the first people to leave – they have the means to leave unlike middle class citizens,” New World Wealth said.

“If one looks at any major country collapse in history, it is normally preceded by a migration of wealthy people away from that country. Conversely, countries that attract HNWIs tend to be very healthy and normally have low crime rates, good schools and good business opportunities.”

Migration patterns

Looking at net inflow and outflow of HNWI’s, New World Wealth found that Australia was the biggest beneficiary of millionaire migrations over the last year, seeing around 12,000 wealthy settle in the country.

This was followed by the United States (10,800), Switzerland (4,000) and Canada (2,200).

“Australia tops the list possibly due to its points-based immigration system which favours wealthy people, business owners and people with professional qualifications – especially lawyers, accountants, doctors and engineers,” the group said.

Other possible reasons for Australia’s popularity among migrating HNWIs include the safety of the country; its climate, nature and scenery; a first world economy; and other lifestyle factors.

“Although company tax and income tax rates in Australia are quite high, it should be noted that unlike most other developed countries, Australia has no inheritance taxes – this encourages
wealthy people to stay in the country and build their businesses for future generations,” NWW said.

China topped the list of net outflows, with around 16,000 HNWIs leave the country to settle elsewhere.

This was followed by India (7,000), Russia (5,500) and Hong Kong (4,200).

“In last year’s report, we noted that the ongoing outflows of HNWIs from China were not a major concern as China was always producing far more new HNWIs than it was losing to migration.

“However, in light of recent events – trade wars with the US, the Hong Kong protests and possible blame related to the coronavirus outbreak – this view may require a rethink. Also, China’s deteriorating relationship with Australia is a major concern.

“It is possible that China could be in for a rough few years ahead, both in terms of HNWI migration and overall wealth growth,” New World Wealth said.

South Africa

The number of millionaires living in South Africa has continued to decline. As of December 2019, there are approximately 38,400 dollar millionaires living in the country – down by 800 from the number recorded in 2019.

In New World Wealth’s previous report, there were 39,200 millionaires recorded, which was down significantly – a loss of 4,400 millionaires – from the year before that.

While South Africa doesn’t crack the lists for countries with the most millionaire inflows or outflows this year, the report notes that it is among a number of countries that have seen a ‘significant’ number of millionaires leave the country in the last year.

The group said that over 100 millionaires from South Africa moved to a different country. Among inflow destinations, Portugal was highlighted as one country that proved particularly popular for South African millionaires looking to relocate.

“Portugal continues to attract a steady number of HNWIs, fuelled by its popular investor visa program which has attracted large numbers of HNWIs from China, Brazil, South Africa, Turkey and Russia over the past few years,” it said.

Common reasons why HNWIs move:

  • Safety – woman and child safety especially;
  • Lifestyle: climate, pollution, space, nature and scenery;
  • Financial concerns;
  • Schooling and education opportunities for their children;
  • Work and business opportunities;
  • Taxes;
  • Healthcare system;
  • Standard of living;
  • Oppressive government.

Covid-19 impact

New World Wealth noted that the Covid-19 outbreak, and subsequent lockdown of various borders, greatly hampered migration efforts – with both inward and outward movement declining.

Going forward, travelling and migration will likely be more complicated, the group said, which will ultimately impact future trends.

For example, investor visa programmes will take a hit in the short-term, which may lead to loosening or reducing entry requirements for such programmes in the coming years. Furthermore, countries with large numbers of wealthy expats, like the UAE, may see an HNWI exodus in 2020/2021.

“We expect Australia, the United States and Switzerland to remain the preferred HNWI destinations globally over the next decade. We also expect New Zealand to emerge as a major HNWI destination in the future.”

Read: This is what South Africa’s millionaires study

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A significant number of wealthy South Africans have left the country