The well-heeled look to the East as an ideal destination to invest their wealth

The United States had seven million millionaire households last year, the most in the world. Japan took third place with one million, according to the report. FILE PHOTO

What you need to know:

  • Although Europe remains the destination of choice for the millionaires, otherwise known as high net worth individuals (HNWI), investment in Asia Pacific shot up to 17 per cent in 2013, up from 14 per cent in 2007. This is expected to go up to about 19 per cent by 2017.
  • Lately investors have set up in droves in Africa attracted by growth in the middle class as well as a high number of a young techno-savy population following the explosion of internet use in the continent.
  • The report that covers the period from the end of 2007 — the peak before the global financial crisis — to 2013 says Europe is losing out following a significant drop in investments in Switzerland, France, Spain and Asia as cash finds its way to Asia and Africa.

Kenyan millionaires are looking East as the preferred destination for their wealth, a report says.

Although Europe remains the destination of choice for the millionaires, otherwise known as high net worth individuals (HNWI), investment in Asia Pacific shot up to 17 per cent in 2013, up from 14 per cent in 2007. This is expected to go up to about 19 per cent by 2017.

“Of the assets Kenyan HNWIs hold abroad, the share allocated to Europe decreased from 44 per cent in 2007 to 37 per cent in 2013. This was caused by a significant drop in investments in Switzerland, France, Spain and Italy in particular and movement of investment away from developed markets into Africa and Asia,” the Wealth in Kenya report says.

The biggest beneficiary in the Asia Pacific region is Singapore, which has registered large inflows. It is not surprising, therefore, that the country has become a popular holiday destination for Kenyans, some of whom may be checking on their wealth.

Africa is also emerging as a competitive destination as its share jumped to 15 per cent in 2013. The continent, that has been identified as the place to be for investors who want to grow their wealth, will increase its share of the super-rich’s assets to about 18 per cent by 2017.  In 2007, the continent held a measly 10 per cent of the assets.

Kenya may be a beneficiary from its own millionaires as most of the inflows in Africa found their way to South Africa and East Africa in that order. This may explain the boom in real estate being experienced in Kenya as the report identifies the sector as among the millionaires’ favourite.

STRONG TIES

Countries in Africa, including Kenya, have forged strong ties with their counterparts in the East, especially China, which is financing mega-development projects that may have signalled to Kenyan millionaires that they should follow their government in looking East.

Lately investors have set up in droves in Africa attracted by growth in the middle class as well as a high number of a young techno-savy population following the explosion of internet use in the continent.

In addition, all indications are that African economies will experience rapid growth expected to be propelled by viable oil discoveries and other minerals in most countries, especially in Eastern Africa.

Europe took the largest split of the HNWI assets with 37 per cent followed by North America with 23 per cent and Asia Pacific. Other destinations include Africa 15 per cent, Latin America at six per cent and Middle East at two per cent in that order.

The bulk of these investments in Europe are held by private banks in the United Kingdom and Switzerland as well as second homes in cities such as London.

The report that covers the period from the end of 2007 — the peak before the global financial crisis — to 2013 says Europe is losing out following a significant drop in investments in Switzerland, France, Spain and Asia as cash finds its way to Asia and Africa.

By 2017, investments in Europe will have gone down to 34 per cent. Last year, the investments stood at 37 per cent.

North America, however, emerges as the biggest loser as its share has dropped from 26 per cent in 2007 to 23 per cent in 2013. This is expected to plummet further to 22 per cent by 2017.

Thursday: Read about Kenya’s wealthy political dynasties and the billionaire landowners