Reversing a 2022 decline, the number of ultra-high-net-worth individuals worldwide jumped 4.2% in 2023, according to the latest Wealth Report from London-based property consultancy Knight Frank.
The annual report, released Wednesday, defines “ultra-high-net-worth” as having a net worth of at least US$30 million. Of the total 626,619 ultra-wealthy individuals―up from 601,300 a year earlier―the largest proportion comes from North America, with a 7.2% increase over 2022, the report says.
“The U.S. story here is massive,” says Liam Bailey, global head of research at Knight Frank and the report’s editor. “Not only has the U.S. been a huge force in wealth creation, but our forecast over the next five years sees a third of newly wealthy people coming from the U.S. as well.”
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Bailey attributes the reversal to “a revival in asset pricing, led by equities, gold, Bitcoin, and even residential properties.”
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“The big story,” Bailey says, “is that wealth creation is back.”
By region, the Middle East has the second largest population of ultra-wealthy, up 6.2%, with Africa in third place, up 3.8%. Only Latin America saw a decline in wealthy people, with a 3.6% drop. By country, Turkey leads the rankings with a 9.7% expansion of the ultra-wealthy population, followed by the U.S. at 7.9%, India at 6.1%, South Korea at 5.6%, and Switzerland at 5.2%.
The increasingly global flow of capital may account for some shifts, Bailey says. “Money from Latin America has moved into U.S. markets like Miami. And while markets like London and New York still attract the attention of wealthy property buyers, we’re seeing a shift to new markets,” he says.
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Dubai “has been a standout as a new global hub in terms of where the world’s wealthy want to be and invest. Hubs like Miami and Milan are also trying, quite successfully, to attract wealth.”
The evolution of those markets creates a virtuous cycle where wealthy investors see “an opportunity play” to invest in commercial real estate and infrastructure, Bailey says.
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“Wealthy people need services in locations they’re seeking,” he says, pointing to the lack of high-quality schools in Miami—something an influx of wealthy people could seize on and remedy.“And the value correction in commercial real estate, with more to go, means there are major openings for well-capitalized investment to get into areas of redevelopment and repurposing of buildings.”
The increasing mobility of wealth also means governments are moving to “balance impacts of those money flows,” Bailey says. “In the last 12 months, Singapore has increased stamp duties on foreign property buyers. We’ve seen the same pattern in Canada, with a foreign-buyer ban. Portugal’s foreign-investor scheme, which encouraged wealthy people to buy real estate, has shifted to other investments,” including company creation, arts, and research.
“It’s an attempt to balance inflows of wealth with the needs and requirements of local residents. Wealth can be a controversial topic, and governments will always try to balance inequality in some way,” Bailey says.
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At the same time, wealth expansion doesn’t necessarily come at the expense of the less affluent—it can create “genuine economic growth,” he says.
By 2028, the Knight Frank Wealth Report predicts, the number of ultra-wealthy individuals worldwide will increase by 28.1%. Asia will lead the way, Knight Frank says, with high growth in India (50%), the Chinese mainland (47%), Malaysia (35%), and Indonesia (34%). Europe and Latin America are “expected to be the weakest regions,” the report says.
Investing in nature to address climate change, support biodiversity, and protect ocean health—and more—is expected to reach record levels this year in response to more regulation and market demand, according to Cambridge Associates, a global investment firm.
Still, the amount of private capital invested to support natural systems will fall far short of what’s needed, according to the annual “State of Finance for Nature” report published in December from the United Nations Environment Programme.
A big reason is that nearly US$7 trillion in public and private finance was directed to companies and economic activities in 2022 that caused direct harm to nature, while only US$200 billion was directed to so-called nature-based solutions, or NbS—investments that protect, conserve, restore, or engage in the sustainable management of land and water ecosystems, as defined by the United National Environment Assembly 5, or UNEA5, the report said.
“Without a big turnaround on nature-negative finance flows, increased finance for NbS will have limited impact,” it said.
But the report also said that the misalignment “represents a massive opportunity to turn around private and public finance flows” to meet targets set by the United Nations Rio Conventions on climate change, desertification, and biodiversity loss.
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The conventions aim to limit climate change to 1.5 degree Celsius above pre-industrial levels, protect 30% of the earth’s land and seas by 2030, and to reach “land degradation neutrality” by 2030. Reaching those goals will require more than double the amount of current levels of nature-based investing by 2025, to US$436 billion, and nearly triple today’s levels to US$542 billion by 2030, the report said.
Most of the US$200 billion invested in NbS today is by governments, but private investors contributed US$35 billion—including US$4.6 billion via impact investing funds and US$3.9 billion via philanthropy. The largest source of private finance was in the form of biodiversity offsets and credits. [An offset is designed to compensate for biodiversity loss, while a credit is the asset created to restore it].
Many wealthy individuals and families concerned about climate change and the environment so far have focused their investment dollars on climate solutions and innovations in technology and infrastructure, or in technologies supporting food and water efficiency, says Liqian Ma, head of sustainable investment at Cambridge Associates.
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But “increasingly there is growing awareness that nature provides a lot of gifts and solutions if we prudently and responsibly manage nature-based assets,” Ma says.
Investments can be made, for instance, in sustainable forestry and sustainable agriculture—which can help sequester carbon—in addition to wetland mitigation, conservation, and ecosystem services.
“Those areas are not in the mainstream, but they are additional tools for investors,” Ma says.
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Finance Earth, a London-based social enterprise, is among the organizations working to make these tools more mainstream by creating a wider array of nature-based solutions in addition to related investment vehicles.
Finance Earth groups nature-based solutions into six themes: agriculture, forestry, freshwater, marine/coastal, peatland, and species protection. Supporting many of these areas are an array of so-called ecosystem services, or benefits that nature provides such as absorbing carbon dioxide, boosting biodiversity, and providing nutrients, says Rich Fitton, director of Finance Earth.
Each of these ecosystem services are behind existing and emerging markets. Carbon-related disclosure requirements (at various stages of approval in the U.S. and elsewhere) have long spurred demand for carbon markets, the most mature of these markets.
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Cambridge Associates, for instance, works with dedicated asset managers who have been approved by the California Air Resources Board to buy carbon credits, Ma says.
In its annual investment outlook, the firm said California’s carbon credits should outperform global stocks this year as the board is expected to reduce the supply of available credits to meet the state’s emission reduction targets. The value of these credits is expected to rise as the supply drops.
In September, the G20 Task Force on Nature-Related Financial Disclosures released recommendations (similar to those put forward several years ago by the Task Force for Carbon-related Financial Disclosure) that provide guidance for how companies can look across their supply chains to assess their impact on nature, water, and biodiversity “and then start to understand what the nature-related risks are for their business,” Fitton says.
The recommendations will continue to spur already thriving biodiversity markets, which exist in more than 100 countries including the U.S. In the U.K., a new rule called “Biodiversity Net Gain” went into effect this month requiring developers to produce a 10% net gain in biodiversity for every project they create.
Though developers can plant trees on land they’ve developed for housing, for example, they also will likely need to buy biodiversity credits from an environmental nonprofit or wildlife trust to replace and add to the biodiversity that was lost, Fitton says.
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This new compliance market for biodiversity offsets could reach about £300 million (US$382 million) in size, he says.
Finance Earth and
are currently raising funds for a U.K. Nature Impact Fund that is likely to invest in those offsets in addition to other nature-based solutions, including voluntary offset markets for biodiverse woodlands and for peatlands restoration.
The fund was seeded with £30 million from the U.K. Department for Environment, Food and Rural Affairs—money that is designed to absorb first losses, should that be needed. The government investment gives mainstream investors more security to step into a relatively new sector, Fitton says.
“We need the public sector and philanthropy to take a bit more downside risk,” he says. That way Finance Earth can tell mainstream investors “look, I know you haven’t invested in nature directly before, but we are pretty confident we’ve got commercial-level returns we can generate, and we’ve got this public sector [entity] who’s endorsing the fund and taking more risk,” Fitton says.
Since December 2022, when 188 government representatives attending the UN Biodiversity Conference in Montreal agreed to address biodiversity loss, restore ecosystems, and protect indigenous rights, several asset managers began “creating new strategies or refining strategies to be more nature or biodiversity focused,” Ma says.
He cautioned, however, that some asset managers are more authentic about it than others.
“Some have taken it seriously to hire scientists to do this properly and make sure that it’s not just a greenwashing or impact-washing exercise,” Ma says. “We’re starting to see some of those strategies come to market and, in terms of actual decisions and deployments, that’s why we think this year we’ll see a boost.”
Fitton has noticed, too, that institutional investors are hiring experts in natural capital, recognizing that it’s a separate asset class that requires expertise.
“When that starts happening across the board then meaningful amounts of money will move,” he says. “There’s lots of projects there, there’s lots of things to invest in and there’ll be more and more projects to invest in as more of these markets become more and more mature.”