South African HNWI investments in offshore funds rise, property drops: report

South African HNWI investments in offshore funds rise, property drops: report

High-net-worth-individuals (HNWIs) in South Africa have decreased their investment allocation into real estate and property investments and increased the amount of money that is held in overseas investment in the past ten years, according to a wealth report on the region’s ultra-rich.

Despite real estate remaining the largest asset class for HNWIs in South Africa at the end of 2017, the trend towards moving funds into overseas investments or ‘offshore’ is on the rise, according to the South Africa 2018 Wealth Report released by AfrAsia Bank and New World Wealth last week

The report found that from 2007 to the end of 2017 HNWIs in South Africa decreased their real estate allocation from 33% in 2007 to 30% in 2017.

Overseas investment rise

The movement of funds overseas or offshore by South African HNWIs over the past ten years has increased to 17% of their wealth offshore compared to 13% in 2007. And the report found that this percentage is expected to rise to 22% by 2027. This rise will be fuelled by increased allocations to foreign property, foreign cash and foreign equities.

At the end of 2017, real estate was the largest asset class for HNWIs in SA (30% of total HNWI assets), followed by equities (28%), business interests (21%), cash and bonds (15%) and “alternatives” (6%).

HNWIs are defined as those individuals with wealth of $1m (about R12m) or more. The report defines wealth as net assets of a person. It includes all their assets (property, cash, equities, business interests) less any liabilities.

For the purposes of the report, real estate allocation includes all local and foreign property held by the HNWIs, including their primary residence.

Equities growth

Elsewhere in the report, equities recorded the strongest growth over the past ten years, while real estate and cash were the worst performing asset classes, according to the report.

To register to view the full report, click here for more details.

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Gary Robinson

Commercial Director, Head of Video at International Investment.