Surge in super-rich individuals raises new standards for defining “wealth”

The landscape of wealth is shifting dramatically, with the threshold for what constitutes “ultra-high-net-worth individuals” (UHNWIs) rising steadily, Fortune highlights.

For most people, $30 million represents a substantial amount of wealth; however, for ultra-high-net-worth individuals (UHNWIs), this figure is now just the starting point. According to Capgemini data, the number of individuals with assets exceeding $30 million surged from 157,000 in 2016 to 220,000 in 2023, marking an increase of nearly 28 per cent in just seven years. As more multimillionaires enter the scene, vying for luxurious items like priceless art and lavish yachts, the definition of "wealthy" is continually rising, adding extra zeros to the equation.

Many of today's new UHNWIs have accumulated their fortunes primarily through entrepreneurship or high-level positions in the tech industry, as noted by Elias Ghanem, global head of Capgemini’s Research Institute for Financial Services. This shifting baseline of wealth is influencing the behavior and aspirations of the ultra-rich. Ghanem explains that UHNWIs tend to focus on wealth growth, while other high-net-worth individuals (HNWIs) prioritise wealth preservation. 

This difference arises because UHNWIs are better positioned to endure short-term market fluctuations, thanks to their long-term investment strategies and significant discretionary income, resulting in a higher risk tolerance. The gap between the rich and the ultra-rich continues to widen, fueled by inflation and the emergence of diverse wealth-building avenues such as cryptocurrency, startups, tech ventures, and even social media influencing.

Capgemini reports that the number of UHNWIs in North America grew by 7.3 per cent last year, driven by "economic resilience, easing inflationary pressures, and a rally in the US equity market," according to Ghanem. According to Ghanem, a variety of US government spending initiatives designed to enhance domestic manufacturing have contributed to capital growth. He specifically mentioned the CHIPS Act and the Inflation Reduction Act, both launched in 2022, as significant factors. 

The CHIPS Act has resulted in over $230 billion in private-sector investment in the semiconductor manufacturing industry, while the Inflation Reduction Act has spurred $201 billion in construction spending. Additionally, the U.S. GDP grew at an annualized rate of 3.3 per cent last year, significantly exceeding expectations. Together, these developments have driven what Ghanem describes as “the biggest economic revolution in generations,” resulting in a surge of new UHNWIs whose businesses or investments thrived during this boom. For most working individuals, $30 million would ensure a comfortable, luxurious lifestyle; however, for the wealthiest, this amount is merely the entry point. 

David Gibson-Moore, president of Gulf Analytica, noted that today’s ultra-rich are evaluated by new benchmarks, with some financial analysts suggesting that $100 million is now the standard for maintaining status at private equity gatherings. Knight Frank's 2024 Wealth Report highlights that the strong performance of the US economy, combined with a notable rise in equity markets, has fueled global wealth creation. By the end of 2023, there were 4.2 per cent more UHNWIs compared to the previous year, totaling over 626,600 worldwide. While North America led this growth, Europe remains home to the wealthiest individuals. 

The landscape of wealth is expanding, yet entry into this elite group is increasingly challenging, with experts estimating that it now requires $50 to $100 million in assets to gain access. Knight Frank anticipates that the number of wealthy individuals will rise by approximately 28 per cent over the next four years, although this growth will be "noticeably slower" than in the previous five years due to inflation's impact. 

This expanding group of UHNWIs is particularly interested in real estate; nearly 20 per cent plan to invest in commercial real estate this year, while a similar proportion aims to purchase residential properties. The evolving preferences of these newly wealthy individuals present opportunities for investors, particularly developers who can cater to their tastes. 

Capgemini's research indicates that a significant majority (91 per cent) of UHNWIs are drawn to passion investments, such as luxury real estate, fine wine, collectibles, and art. Ghanem noted that the increasing demand for luxury second homes has elevated real estate advisory services to the top five requirements for UHNWIs when selecting a wealth management firm.

By Naila Huseynova