How the super-rich in South Africa spend their cash
New World Wealth and AfrAsia Bank have released a combined wealth report for 2017, providing a comprehensive review of the wealth sector in Africa, including HNWI trends, luxury trends and wealth management trends from 2006 to 2016.
According to the report, Mauritius retains its spot as the wealthiest country in Africa, ranking ahead South Africa, Namibia, Botswana, Egypt and Angola. Wealth per person for those living in Mauritius increased from $21,700 to $25,700 in one year.
Conversely, people living in Zimbabwe are the poorest, with $200 per person. As per the report, South Africa was the most popular destination for the super-rich, with approximately 15,000 multi-millionaires visiting the country in one year.
For the purposes of this report HNWIs are also referred to as “dollar millionaires”, and are those individuals with wealth of $1m (about R14 million) or more.
Where they live
South Africa dominates the Africa city wealth list, with four cities featuring in the top 10. These include Johannesburg, Cape Town, Durban and Pretoria.
Johannesburg has by far the highest concentration of HNWI’s with the total wealth held in the city amounts to US$245 billion. It is home to 18,200 millionaires and 2 billionaires and is the home to the country’s major sectors including financial services, professional services (law firms), construction, telecoms and basic materials.
Cape Town is a distant second with the total wealth held in the city amounts to US$135 billion and is home to 8,200 millionaires and 2 billionaires.
Durban has a total wealth of US$46 billion, is home to 3,200 millionaires and 1 billionaire and Pretoria has a total wealth of US$42 billion and is home to 2,600 millionaires.
Where they have their second homes
Second homes in London, New York, Sydney, Melbourne and Tel Aviv are popular for South African HNWIs.
| Cities | US$ per square meter |
|---|---|
| London | 41 500 |
| New York | 33 000 |
| Geneva | 29 500 |
| Sydney | 20 800 |
| Paris | 19 300 |
| Melbourne | 15 000 |
| Tel Aviv | 9 800 |
| Dubai | 8 200 |
What they do for fun
Wildlife safaris were the most popular pastime for high net worth individuals (HNWIs) in both South Africa and Africa in 2016, the report noted.
It overtook other more casual pastimes, including collecting and horse-riding, as the continent’s wealthiest looked to holiday away from work and business for their leisure time.
The most popular pastimes are detailed below.
- Wildlife Safari
- Golf
- Cycling
- Art collecting
- Horses
- Tennis
- Skiing
- Collecting cars
- Fly-fishing
- Collecting watches
Their favourite hotels
| Rank | Hotel | Location |
|---|---|---|
| 1 | 12 Apostles Hotel & Spa | Cape Town, SA |
| 2 | Four Seasons Seychelles | Seychelles |
| 3 | Lost City and Sun City | Sun City, SA |
| 4 | La Moumania | Marrakesh, Morocco |
| 5 | The Beverley Hills | Umhlanga, SA |
What they drive
Over the review period, classic car prices rose by a strong 180%, making it the best performing investment class for HNWIs over this period.
However, it should be noted that the global classic car market is showing signs of slowing down. The most recent Pebble Beach Concours d’Elegance auction held in August 2016 recorded sales of US$340 million, down from US$396 million the year before.
Popular classic cars for African HNWIs are listed below.
| Ranked by price | Years produced | Price US$ |
|---|---|---|
| Ferrari 250 GTO | 1960s | 24 000 000 |
| Ferrari 250 GT California Spider | 1960s | 20 000 000 |
| Ferrari 250 Testa Rossa | 1950s | 18 000 000 |
| Bugatti Type 41 Royale | 1930s | 16 000 000 |
| Mclaren F1 | 1990s | 8 000 000 |
| Porsche 550 Spyder | 1950s | 2 000 000 |
| Mercedes Gullwing 300sl | 1950s | 1 700 000 |
| Porsche 959 | 1980s | 1 500 000 |
| Aston Martin DB4 | 1950s | 1 300 000 |
| Aston Martin DB5 | 1960s | 1 000 000 |
| Lamborghini Miura | 1970s | 800 000 |
| Lamborghini Contach | 1980s | 500 000 |
| Jaguar E Type | 1960s | 300 000 |
| Ferrari Dino | 1970s | 250 000 |
| Porsche 911 | 1960s | 120 000 |
| Morgan Roadster | 1960s | 100 000 |
What they wear
Super-luxury watches is a particularly fast growing collectable segment in Africa., noted the report. According to estimates, U$$46 million was generated in African sales of these watches in 2016, up from U$$13 million in 2006.
Major players in this space include: Patek Philippe, Frank Muller, Breguet, Vacheron Constantin, Ulysse Nardin, Blancpain, Audemars Piguet, A Lange & Sohne and Richard Mille.
| Ranked by Price | For | Average Price US$ |
|---|---|---|
| Patek Phillipe Watch | Woman | 25 000 |
| Breguet Watch | Men | 20 000 |
| Vacheron Constantin Watch | Men | 15 000 |
| Luis Vuitton Handbag | Woman | 30 000 |
| Prada Handbag | Woman | 2 200 |
| Gucci Handbag | Woman | 2 200 |
| Docle and Gabanna Dress | Woman | 2 000 |
| Christian Louboutin Shoes | Woman | 1 300 |
| Gerogio Armani Suit | Men | 1 200 |
| Zegna suit | Men | 1 200 |
What they collect
New World Wealth estimates that African HNWIs held US$870 million worth of fine art at the end of 2016. Globally, fine art prices have risen by 3% over the past 10 years, whilst African fine art prices have risen by 22%.
South Africa is the largest fine art market in Africa. Leading artists in SA include Irma Stern, Thomas Baines, JH Pierneef, Alexis Preller, Pieter Wenning, Gerard Sekoto, Maggie Laubser, Hugo Naude, Portchie, Isabel le Roux and Dimitrov.
Prior to the review period, the global fine wine market also recorded tremendous growth, with prices paid for certain vintages of Lafite Rothschild having increased more than tenfold in the 10 years from 1996 to 2006.
Heavy buying by the Chinese in the Hong Kong market was the main driver of this growth. As a result of this boom, portfolio managers that specialized solely in fine wine investments began to crop up and offer unique wine- denominated investments.
What they drink
| Drink | Type | Minimum price US$ |
|---|---|---|
| Johnnie Walker Blue Label | Blended Whiskey | 180 |
| Dom Perignon Champagne | Champagne | 120 |
| Hennessy Cognac | Cognac | 40 |
| Gelnmorangie Whiskey | Single Malt Whiskey | 40 |
| Moet and Chandon Champagne | Champagne | 30 |
| Veuve Clicquot Champagne | Champagne | 25 |
| Jonnie Walker Black Label | Blended Whiskey | 25 |
| Jameson Whiskey | Blended Whiskey | 22 |
| Jack Daniels | Bourbon | 20 |
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