More Property Millionaires Article Published: 09:51 12/12/2006 Article Classification: Sunset Beach Mexico
< Back to articles

A new report predicts that a quarter of UK households will have $1 million in assets in a decade and it will also boast one million ‘super millionaires’.

Barclays Wealth Insights, a new quarterly report written by the Economist Intelligence Unit (EIU) on behalf of Barclays Wealth (the wealth management arm of Barclays) claims that households in the UK with more than $1 million (£526,900) in property, land, savings and investments will grow to 26% in the next ten years – making it the wealthiest of the G7 economies (figures are calculated in dollars because it is a global study). By comparison, the US and Japan will have 16% and 22% in the numbers of million dollar households.

The report further predicts that the UK will play host to one million ‘super millionaires’ (those with assets over $3 million (£1,580,700) for the first time in the next decade. The UK is one of five G7 countries that will break the million ‘super millionaire’ threshold by 2016, following US, Canada, Japan and Germany. The UK will also see a huge rise in the number of so-called ‘nearlionaires’ over the next decade, with almost half of all UK households (49%) holding aggregate wealth between US$500k and US$1m (all annual household incomes are set to increase on average by 67% over the next ten years).

A nation of entrepreneurs

The report concludes that this wealth is being driven by a strong property market and ‘an increasing entrepreneurial culture that encourages individuals from all walks of life to take risks as they strive for business success’. Significantly, this means that the typical wealthy individual in the UK will rely less on inherited wealth and more on active investment – in buy to let for example.

Offering some insights into how product and service providers should target these affluent individuals, Mark Kibblewhite, Managing Director of Barclays Wealth’s private banking division, said: “New entrepreneurs want closer control and handling of their assets, so striking a balance to provide specialist expertise but also choice and control is key.”

“We are seeing wealth accumulation at a much earlier stage in life,” he added. “Many still have a lot of earning potential ahead of them, so their investment risk profile is different”. This supports recent findings from Datamonitor which recently found that, between 2000 and 2005, the number of wealthy individuals in the UK aged between 18 and 45 grew by 33,200 - from 102,900 to 136,100 (a rise of 32.3%). This group represented 15.5% of all wealthy people in the UK in 2005, but now own 20.9% of the onshore liquid wealth held by high net worth individuals in Britain. Their wealth has grown almost twice as fast as that held by any other age group in the last five years.

With the number of high net worth individuals in the UK predicted to grow to 1.34 million by 2010, Datamonitor also claimed that they already hold £541.5 billion in total onshore liquid assets. In 2005, there were 87,970 individuals with over £1 million in onshore liquid assets and, by 2010, Datamonitor predicts that there will be around 140,000.

Commenting on the broadening of the social background of high net worth individuals, based on socio-economic changes, Kibblewhite said: “The boom in buy-to-let property and property prices has meant that people can make more money without high start-up costs or expensive education.” Greater confidence in property as an asset may increase the number of UK buy to let investors looking overseas and experienced UK landlords could help to develop rental markets in the new investment markets.

Barclays Wealth Insights is available on www.barclayswealth.com and the next volume of Barclays Wealth Insights will be published in early 2007. The new findings from the first volume of Barclays Wealth Insights are based on a new forecast developed by the Economist Intelligence Unit specifically for Barclays Wealth to provide a detailed prediction on the growth of wealthy individuals over the next decade. Barclays Wealth Insights charts the growth in financial wealth (investments and savings) and non-financial wealth (property and land) among G7 households and is supported by EIU’s Business Environment Ranking data and a panel of wealth experts - drawn from academia, industry and financial circles - to provide insights into trends driving wealth creation.