The rich are leaving South Africa – with this one country expected to be a major destination

AfrAsia Bank and New World Wealth have published the latest 2020 Global Wealth Migration Review, looking at recent wealth migration trends, while commenting on the potential impact of the coronavirus outbreak on wealth migration going forward.

Wealth migration figures are a very important gauge of the health of an economy, said AfrAsia Bank. The group specifically focused on high net-worth individuals (HNWIs) with wealth of $1 million or more.

“For instance, if a country is losing a large number of HNWIs to migration, it is probably due to serious problems in that country such as 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. 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.

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.

The group’s data shows that a significant number of wealthy South Africans are leaving the country, with over 100 HNWIs wealth outflows recorded over the past year.

Global citizenship company Henley & Partners has reported a sharp increase in South African enquiries in the third quarter compared to Q1 2020, with a nearly 50% increase in enquiries overall as the pandemic coursed around the globe.

“The tumultuous events of 2020, including the unplanned pause during the great lockdown, have resulted in people from all walks of life re-evaluating their circumstances and reconsidering how they wish to conduct their lives and — for those fortunate enough — choosing where they want to live by opting for investment migration,” said managing partner and head of South, East and Central Africa, Amanda Smit.

“Many are taking stock and ensuring they are better prepared for the next pandemic or major global disruption. The relentless volatility in terms of both wealth and lifestyle has resulted in a significant shift in how alternative residence and citizenship are perceived by high-net-worth investors around the world.”

Smit said that proactive, wealthy South Africans who have invested in alternative residence or citizenship for their families are better place placed to weather potential future storms.

Destinations 

New World Wealth said that the most popular countries for migrating HNWIs over the past year included:

• Australia,
• USA,
• Switzerland,
• Canada,
• Singapore,
• Israel,
• New Zealand,
• UAE,
• Portugal
• Greece.

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, New World Wealth said.

Commenting on the impact of the coronavirus outbreak, the group said that it is likely to become more difficult to get HNWIs to buy into traditional investor visa programmes. As a result, many programmes are expected to reduce their entry requirements in 2020/2021, it said.

“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: The UK is making changes to its visas in October – what South Africans should know