Entry point for top 1% of wealthiest people in Australia falls to US$4.673 million

28 February 2024

Membership into the top 1% club of wealthiest people in Australia has become slightly easier, with the threshold falling from a net individual wealth of US$5.5m in 2022 to US$4.673 million in 2023, according to the findings of Knight Frank’s just-released The Wealth Report 2024.

Australia now ranks 7th in the world for the money required to be in the top 1% of wealthiest people, falling from its ranking of 3rd last year.

However, the entry point to the top 1% is still significantly more than the US$2.8 million required in 2021.

Australia sits ahead of New Zealand, where US$4.574 million is required to enter the 1% club, but behind the likes of Monaco, which sits in top position, with US$12.883 million required to enter the top 1%.

It’s easier to be in the 1% club than it is to gain UHNWI status

Knight Frank’s The Wealth Report 2024 found that in Australia, the number of ultra-high-net-worth individuals (UHNWIs) – defined as those with a net worth of $30 million or more, significantly higher than the US$4.673 required to be in the top 1% club – rose by 2.9% from 2022 to 2023 to reach 15,347 people.

The number of UHNWIs in Australia is expected to rise a further 27% by 2028 to 19,491 people.

Globally, the number of UHNWIs rose by 4.2% in 2023 to 626,619 from 601,300 a year earlier. This increase more than reverses the decline witnessed in 2022.

At a regional level, North America leads with the number of UHNWIs up 7.2%, the Middle East comes in second place (6.2%) Africa takes third place, up 3.8% and Australasia comes in 4th at 2.9%. Latin America was the only region to see its population of wealthy individuals decline (-3.6%).

In terms of key country performance, Turkey leads Knight Frank’s rankings with a 9.7% expansion in UHNWI numbers, followed by the US (7.9%), India (6.1%), South Korea (5.6%) and Switzerland (5.2%).

Knight Frank Chief Economist Ben Burston said: “The improving interest rate outlook, the robust performance of the US economy and a sharp uptick in equity markets helped wealth creation globally over 2023.

“At the end of 2023 there were 4.2% more UHNWIs than a year earlier, with nearly 70 very wealthy investors minted every day, taking the global total to just over 626,619.”

According to Knight Frank’s The Wealth Report, the number of wealthy individuals globally is expected to increase by 28.1% over the next five years to 2028. While positive, this rate of expansion is noticeably slower than the 44% increase experienced in the five-year period to 2023. The report points to strong outperformance from Asia, with high growth in India (50%), the Chinese mainland (47%), Malaysia (35%) and Indonesia (34%).

Wealth revival

The revival in wealth creation was supported by global economic growth and the improved fortunes of key investment sectors. In the first half of 2023, despite ongoing rate tightening and rising bond yields, equities surged on the back of enthusiasm surrounding AI. Even as this trend waned in the second half of the year, declining inflation and the anticipation of earlier and more substantial rate cuts provided renewed momentum to equity markets. The S&P Global 100 delivered a 25.4% annual increase in 2023, albeit this was hugely flattered by the outstanding performance of the “magnificent seven” US tech stocks.

While some sectors grappled with the lingering impact of elevated debt costs, particularly commercial real estate and private equity, residential property values surprised on the upside. Residential capital values grew by 3.1% across the world’s leading prime markets through 2023. For investors, residential returns were supported by prime global rents rising at an average three times their long-run trend. Other

sectors delivered positive returns during the year, with gold up 15% and Bitcoin up 155%, reversing a large part of the losses sustained by this volatile asset in 2022.

Real estate implications

Knight Frank Chief Economist Ben Burston comments further: “The expanding cohort of wealthy individuals looks favourably on real estate, with almost a fifth (19%) planning to invest in commercial real estate this year. Going forward, however, the type of assets acquired look set to change, with private investors expressing a strong preference to diversify into the emerging living sector and healthcare asset classes and less appetite for the traditional mainstays office and retail.”

The Wealth Report notes the opportunities open to wealthy investors looking to access real estate investment. The market disruption impacting offices in particular, but affecting other sectors as well, considered alongside the requirement for investment to “green” existing property assets, points to a need for very deep pools of equity to come into the sector – the rise of private capital investment in real estate points to a readiness to engage with this challenge. With so much wealth due to be created in the coming years, there will be plenty of opportunities for those with the right skills and insights.

According to Knight Frank’s Attitudes Survey, Australia ranks 4th as a location to purchase a new home, with 5.6% saying the most likely location they would buy is in Australia if they were planning to purchase a new home. Australia sits behind the UK (17.7%), the US (9.8%) and France (7.2%).