Having kept the worst of the coronavirus pandemic at bay, New Zealand will now see its ultra-wealthy population grow by more than 50% over the next five years.
The number of millionaires in New Zealand grew by a third over the past five years but will surge by 72% during the next five. Meanwhile, the number of ultra high net worth individuals (UHNWIs, or those worth over $30 million) will increase by 52% over the same time period, according to a new report by Knight Frank, a real estate consultancy.
New Zealand has become so wealthy, in fact, that you need at least $2.8 million just to join the top 1% of wealth earners. This ranks New Zealand fourth after Monaco, Switzerland and the U.S. when it comes to how much you need to join the 1% club. (In Monaco you need at least $7.9 million.)
It’s not just their money that makes Kiwi millionaires the envy of the world though. By December, New Zealand’s passport had become the third most powerful on the planet when the Passport Index calculated the number of countries it granted visa-free travel to.
This concluded a year during which rich people from all corners of the globe were offering millions just to move to the country. At its peak, someone from the U.S. was clicking on Immigration New Zealand’s website every 30 seconds, even though residency costs a minimum of NZ$3 million ($2.2 million) and takes three to four months to process.
“The immigration inquiry numbers are through the roof and our property inquiries will reflect that as well,” says Mark Harris, managing director of New Zealand Sotheby’s International Realty.
But those lucky enough to gain residency are now living a life virtually untainted by coronavirus restrictions. Bars, restaurants and even concert venues have been largely open since September, bar a snap lockdown earlier this month. “We all went skiing last year. We’ve been swimming, surfing, sailing and golfing as per normal,” says Harris.
Another draw for the world’s wealthy is remoteness of many rural and coastal properties in New Zealand.
Roughly a quarter of all UHNWIs are looking to buy a new house this year, according to the Knight Frank Wealth Report. Of these, most (56%) say they are looking to buy in a resort or coastal area. Just under half (47%) said they were searching for somewhere in a rural location.
Unlike previous surveys these are not conditions for their second or third homes. Country or coastal living is likely to be the norm for today’s ultra-wealthy. Nearly a third of respondents said they plan to upgrade the family’s main residence with outdoor space being the most important attribute for a new home.
The coastal, waterfront, beachfront and lifestyles properties within one hour of Auckland’s CBD are currently “very active,” says Jane Guy, managing director of Premium Real Estate.
“Waiheke Island is just going through the roof at the moment,” says Harris. The “island within an island,” as he describes it, is only 45 minutes by boat from central Auckland and has seen property auctions going well above their reserves.
But all this money is driving up prices. Average house prices in Auckland, New Zealand’s biggest city, ended the year 18% higher. At the luxury end, prices were up 157%, according to Knight Frank.
This is causing resentment at home. Rapidly rising house prices became an election issue last year as first time buyers found themselves priced out of the market. New Zealand’s central bank has said it will introduce mortgage lending restrictions starting next month with the aim of discouraging property speculators.
International buyers are also being discouraged. Unless they are New Zealand citizens or residents, foreign buyers require approval from the Overseas Investment Authority (OIA) and this can take weeks or even months, says Guy.
That’s not putting frustrated millionaires off trying though. “We’re still getting a lot of inquiries from the U.S. and U.K. and other places where people aren’t understanding of that rule,” says Harris.
UHNWI Population To Jump By 27%
New Zealand is not the only country that has benefited during the pandemic, however. Normality is returning to China as well, and so too is the country’s rapid wealth growth. The number of UHNWIs in China grew 16% last year and it expects to add another 32,000 by 2025.
Both countries form part of the Asian wealth boom, which, over the next five years, will be led by India and Indonesia, with the latter doubling its millionaire population.
Whereas the global UHNWI population is set to grow by 27% between now and 2025, in Asia their number is set to swell by 39%.
By then, Knight Frank’s forecasts suggest Asia will be home to nearly a quarter of all UHNWIs on the planet. “Asia is the key wealth story,” says Liam Bailey, global head of research at Knight Frank. “The region is already home to more billionaires than any other.”