ALBAWABA — The world's ultra-high-net-worth individuals saw their fortunes shrink by 10 percent, or $10.1 trillion, in 2022, mainly due to the invasion of Ukraine, according to a report released on Wednesday.
"Challenging markets meant the majority of UHNWIs saw their wealth decline last year, with their collective wealth falling by 10 percent," London-based property consultancy Knight Frank said in its report.
The report, which examined the fortunes of 218,000 UHNWIs, people with a net worth of at least $30 million including their main residence, said that their collective wealth dropped from $101.5 trillion in 2021 to $91.4 trillion in 2022.
Europe suffered the biggest drop in net worth with an average decline of 17 percent, followed by Oceania at 11 percent, the Americas at 10 percent, Asia at 7 percent and Africa at 5 percent.
"Last year the Ukraine crisis fueled the European energy crunch and supercharged already surging inflation," said Liam Bailey, Knight Frank's global head of research and editor-in-chief of its wealth report.
"As a result, 2022 saw one of the sharpest upward movements in global interest rates in history, leading to economic conditions that Collins English dictionary neatly dubbed the ‘permacrisis’,” Bailey added.
The report found that 60 percent of UHNWIs had their fortunes shrink last year, the biggest annual decline in the fortunes of the super-rich since the annual study was first published in 2010.
The global economy teetering on the brink of recession and the rise in interest rates applied by several central banks to counter inflation added to the UHNWIs woes, the report said.
The ultra-wealthy were negatively impacted by exchange rates, along with the unrivalled strength of the dollar which was driven by the United States Federal Reserve's unwavering commitment to one of the fastest cycles of rate hikes in history, Flora Harley, the report's executive editor, said.
There are still "significant risks" for the world economy, Bailey said, adding that later this year "market sentiment will shift, quickly, and investors need to be well placed to take advantage of the very real opportunities emerging across global real estate markets".
The report forecasts that the outlook in 2023 for UHNWIs looks rosier, adding that 69 percent of wealthy investors expected growth in their portfolio this year.
