How safe are safe havens?
The rich are getting
richer and the poor poorer, and the rich are retreating to the
citadels leaving the wasteland to the poor - this could be a
particularly dark interpretation of the findings revealed in The
Wealth Report published by banker, Citi, and property
consultancy, Knight Frank, yesterday, but in my opinion, summarises
where the world is headed.
There are more centa-millionaires, HNWIs with more USD100 million or more in assets, living in Asia than in the West now, and the world's centre of economic gravity has shifted from the mid-Atlantic to somewhere over Turkey and Russia, and will be firmly in India and China by 2050, the report tells us. But it also reminds us that these Asian centa-millionaires, along with HNWIs from across the developing world are using much of their money to buy homes in London, New York and Paris, because they feel safer there - these cities are politically stable and enjoy the rule of law.
Economic growth in the developing world is not solving all of its problems, rather it is masking many of them, like poor governance and corruption, and worsening others, notably environmental degradation. The rich know that. That is why 60 per cent of Chinese millionaires (calculated in British Pounds) are either leaving China or considering doing so. Who feels safe living in a country where you can be arrested, tried and executed within three days?
As The Wealth Report shows, South American HNWIs are heading to Miami, the Chinese to Hong Kong and everyone to London. That's great news for estate agents and vendors in these and other recipient locations, including Monaco, Cote d'Azur, the French and Swiss Alps, Sydney and Auckland. The trouble is that with so many HNWIs arriving the natives are getting restless. Britain has increased stamp duty to 7 per cent for multi-million pound homes, which are mostly bought by foreigners, and the Swiss have voted in a referendum to limit the number of holiday homes in tourist areas to 20 per cent of housing stock, because locals are fed up with being priced-out of the housing market – great news by the way for owners of existing Swiss holiday homes, because their assets have suddenly attained rarity value.
These tax increases and construction caps are mild however, and in themselves little to worry about, except that they could be the start of something more ominous – growing resentment of wealthy foreigners. As any politics lecturer will tell us, when you have one line of division (nationality) compounded by another, (contrasts in wealth), then the potential for conflict becomes exponentially worse. The Occupy Movement has focused on banks, but it would not take a great leap of the imagination to see its supporters outside under-used and over-furnished, luxury flats at One Hyde Park. Squatting has been on the rise across the world for several years, another sign that we need to close the gap between rich and poor. Inward investment should always be welcomed, but it must benefit the locals. That is the only way to ensure real, lasting security for wealthy outsiders moving into “safe havens”.
There are more centa-millionaires, HNWIs with more USD100 million or more in assets, living in Asia than in the West now, and the world's centre of economic gravity has shifted from the mid-Atlantic to somewhere over Turkey and Russia, and will be firmly in India and China by 2050, the report tells us. But it also reminds us that these Asian centa-millionaires, along with HNWIs from across the developing world are using much of their money to buy homes in London, New York and Paris, because they feel safer there - these cities are politically stable and enjoy the rule of law.
Economic growth in the developing world is not solving all of its problems, rather it is masking many of them, like poor governance and corruption, and worsening others, notably environmental degradation. The rich know that. That is why 60 per cent of Chinese millionaires (calculated in British Pounds) are either leaving China or considering doing so. Who feels safe living in a country where you can be arrested, tried and executed within three days?
As The Wealth Report shows, South American HNWIs are heading to Miami, the Chinese to Hong Kong and everyone to London. That's great news for estate agents and vendors in these and other recipient locations, including Monaco, Cote d'Azur, the French and Swiss Alps, Sydney and Auckland. The trouble is that with so many HNWIs arriving the natives are getting restless. Britain has increased stamp duty to 7 per cent for multi-million pound homes, which are mostly bought by foreigners, and the Swiss have voted in a referendum to limit the number of holiday homes in tourist areas to 20 per cent of housing stock, because locals are fed up with being priced-out of the housing market – great news by the way for owners of existing Swiss holiday homes, because their assets have suddenly attained rarity value.
These tax increases and construction caps are mild however, and in themselves little to worry about, except that they could be the start of something more ominous – growing resentment of wealthy foreigners. As any politics lecturer will tell us, when you have one line of division (nationality) compounded by another, (contrasts in wealth), then the potential for conflict becomes exponentially worse. The Occupy Movement has focused on banks, but it would not take a great leap of the imagination to see its supporters outside under-used and over-furnished, luxury flats at One Hyde Park. Squatting has been on the rise across the world for several years, another sign that we need to close the gap between rich and poor. Inward investment should always be welcomed, but it must benefit the locals. That is the only way to ensure real, lasting security for wealthy outsiders moving into “safe havens”.
Last night's by-election victory by the Respect Party's George Galloway at Bradford West is timely. While the unpopularity of wars in Iraq and Afghanisatan with the people of Bradford may have helped him defeat the mainstream parties, his victory owes most to bubbling resentment against austerity and the wealthy. It illustrates clearly the political ramifications of economic trends outlined in The Wealth Report.
ReplyDeleteHNWIs can spend all they want on buying homes in safe havens and protecting them with the latest security gadgets, but their best defence against burglary, riots and revolution is to live among a happy populace who feel they share in the wealth creation and decision-making processes. This may all sound very dramatic, but the world of property can't hide from the world of politics, and the world of politics is becoming increasingly restless.