SA Dollar Millionaires Numbers Drop Due To Rand Devaluation - Where Do SA's UHNWI Live?

According to Credit Suisse Research Institute’s Global Wealth Report the number of South African US dollar millionaires has declined by roughly 4% during 2015/6 to 45 000, largely on the back of significant Rand depreciation.

While South Africa has around 0,7% of the world's adults, it has only 0,1% of the globe's US dollar millionaires - accounting for roughly 25% of SA's individual wealth.

Included into the 45 000 is about 543 UHNWI (Ultra High Net Worth Individuals) - each with net wealth of over US$ 30 million - of which about half lives in Johannesburg (261), about 103 in Cape Town, Durban 31 and Pretoria 28.

The biggest concentration of wealth is in the 4 Johannesburg suburbs - Sandhurst (36), Bryanston (31), Hyde Park (26) and Westcliff (20) - accounting for about 21% of UHNWI in South Africa. With 5% of the 640 people living in Sandhurst being UHNWI, the suburb have just more UHNWI per capita than Clifton in Cape Town where there are 13 UHNWI residing within the suburb population of 305 people.

The biggest concentration of wealth in Cape Town is concentrated in 8 suburbs with a total population of 44 585 - accounting for 77% of the UHNWI living in the city. Only 24 of the 103 UHNWI in Cape Town are therefor living in the rest of the Capetonian suburbs - with a population of about 3,5 million people.

The top 8 Cape Town suburbs in terms of the presence of UHNWI, is CBD (Central Cape Town) (17 of 27 650 people), Camps Bay (13 of 3 800), Clifton (12 of 305), Bishopscourt (10 of 1 520), Constantia (9 of 8 820), Bantry Bay (7 of 1050, Fresnaye (7 of 900) and Llandudno (4 of 540).

There are also 2 030 High Net Worth Individuals (HNWIs) - with a net worth of US$10 million or more. Johannesburg is home to 970 HNWI – almost half (47%) of the multi-millionaire population. This is followed by Cape Town, with 360 HNWI (18%) and Durban, with 120 (6%).

A dollar millionaire is regarded as an adult with net wealth in excess of $1 million. The calculation takes bank deposits, stock and bond holdings and pension fund assets (financial assets), land and housing (real assets) as well as mortgage and consumer debt (debts) into account. 

In nominal terms, the average wealth of South African adults in local currency increased by roughly 16% year-on-year since 2015. In dollar terms however, the average wealth declined by an estimated 4%.

“This is really what impacted the number of millionaires.”

South African wealth has not really recovered in dollar terms since the global financial crisis. While the average wealth per adult is up around 70% in rand terms since 2007, it has dipped roughly 20% since its 2007 peak before the financial crisis, he says.

The mean wealth of the South African population decreased from $21 448 in 2015 to $20 589 per adult in 2016.

Personal wealth in South Africa largely comprises of financial assets, which contribute 65% to the household portfolio.

Koutsoukis says inequality estimates for South Africa have deteriorated since the global financial crisis, but the country is not unique in this respect. During the first part of the 21st century, inequality was trending down, but the trend reversed after 2008. Wealth inequality is largely at the same level as in 2000.

While the South African data is not perfect, it is “fairly decent” when compared to other emerging market countries, he says.

SOURCES – Moneyweb / IOL