By Mourice Seretta
According to Knight Frank’s forthcoming edition of The Wealth Report 2021, 17% of ultra-high-net-worth individuals (UHNWIs) in Kenya are planning to buy a new home in 2021, with Kenya as their most popular destination, followed by the UK, US, South Africa and Canada.
Ben Woodhams, Knight Frank Kenya MD, said: “The Wealth Report confirms a clear rise in demand for residential property as wealthy Kenyans look to buy a new home this year. This was also confirmed in a local Buyer’s Survey that we conducted as Knight Frank Kenya in December 2020, which indicated demand for a second home amongst our clients, especially with a strong focus for rural and coastal properties that have access to open space. The pandemic is super-charging demand for locations that offer green spaces as more people are increasingly focused on wellness as they spent a great deal of 2020 at home, working remotely.”
According to the results of The Wealth Report’s Attitudes Survey of Private Bankers and Wealth Advisors, only 19% of Kenyan high-net-worth-individuals (HNWIs) are considering applying for a second passport or new citizenship, indicating that they see many of the opportunities to create wealth lie at home. This compares with 39% of wealthy Chinese and a whopping 62% of HNWIs in Nigeria.
Respondents in the Attitudes Survey also revealed that Covid-19 is by far the biggest current worry for the Kenyan wealthy when it comes to creating and preserving their wealth.
The Knight Frank Wealth Sizing Model shows that Kenya’s population of High-Net-Worth Individuals
(HNWIs) – those worth over one million US dollars – slipped by 22% last year, compared with a global decline of just 8%, although our wealth sizing model predicts that over the next five years Kenya’s
High-Net-Worth individuals (HNW) population will bounce back by 46%
Andrew Shirley, editor of The Wealth Report at Knight Frank said: “Many may ask why we are interested in the wealthy in the middle of a pandemic? The objective of The Wealth Report is to assess how and where the ‘one – percent” are investing and what they are likely to do next. This gives policymakers and investors, insight into behaviour and attitudes to understand market and asset performance.”
Wealth advisers who participated in the Knight Frank Attitudes Survey in 2020 stated that their
Kenyan clients allocated their property investment portfolio in the following property types: Residential private rented sector (PRS) (22%), Retail (17%), Offices (14%) and Retirement (13%).
The Attitudes Survey respondents made up of wealth managers and private bankers said Ultra-HighNet-Worth-Individuals (UHNWI) had increased their philanthropic activities in 2020.
The survey respondents stated that their clients directed their philanthropic activities towards three broad
categories: Healthcare/disease prevention (89%), Conservation/the environment (79%), and Education (70%).
Ben Woodhams Knight Frank Kenya MD stated, “The pandemic may have accelerated these trends but there was already increased interest in these sectors pre-pandemic.
As previously indicated in our research, Africa’s overall economic and demographic fundamentals present a strong case for investment in social sectors such as healthcare for investors.”
Despite the economic effects of the pandemic, almost 10% of the respondents stated that their clients still maintained their luxurious lifestyle and increased spending on tangible investments of passion, such as art and classic cars.
The respondents answered that the top 5 most popular investments of passion in 2020 amongst UHNWIs in the country were: Art (50%), Classic Cars (46%) and Watches (46%), Rare Whisky (42%) and Jewellery (38%).
The forthcoming edition of The Wealth Report 2021 also tracks investments of passion through The Knight Frank Luxury Investment Index (KFLII), and globally, Hermés handbags have for the second year in a row, topped the Index (KFLII) with prices up 17% in 2020, according to data supplied by Art Market Research.
However, only 4% of The Attitudes Survey respondents said their Kenyan clients collected handbags.
Andrew Shirley, editor of The Wealth Report at Knight Frank said, “The market for luxury collectables, which relies on the auction market for much of its profile, is badly affected by the Covid- 19 pandemic.
But some sectors like handbags are weathering the storm better than higher-value assets like the top end of the art market where no painting sold for over US$100 million for the first time in several years.”
After a sluggish 2019 where the value of the HAGI Top Index – which Knight Frank uses to track the value of classic cars – fell by 7%, 2020 saw cars race back up to third place in KFLII with growth of 6% with Ferraris performing particularly strongly.