Rich people are picking up sticks and getting out of dodge, according to Johannesburg-based research firm New World Wealth, which notes that around 108,000 millionaires migrated across borders in 2018 – a 14% increase over 2017 and more than double the level in 2013.
The top destinations? Australia, the United States and Canada, reports Bloomberg. Around 3,000 of the millionaires left the UK last year – with Brexit and taxes cited as possible motivations.
Present conditions such as crime, lack of business opportunities or religious tensions are key factors, according to the report – which can also serve as key future indicators according to Andrew Amoils, New World Wealth’s head of research.
“It can be a sign of bad things to come as high-net-worth individuals are often the first people to leave — they have the means to leave unlike middle-class citizens,” says Amoils.
According to New World’s report, Australia tops most “wish lists” for immigrants due to its perceived safety (deadly bugs and animals aside, we assume). There is also no inheritance tax down under, and the country has strong business ties to Japan, China and South Korea. Moreover, Australia “also stands out for its sustained growth, having escaped the financial crisis largely unscathed and avoided recessions for the past 27 years,” according to Bloomberg.
The second most popular country was the United States – and in particular the cities of Los Angeles, New York, Miami and the San Francisco Bay as preferred options.
Fleeing China and India
Due to China’s strict regulations on capital outflows in recent years, many of the country’s wealthy are subject to hefty taxes. In response, assets are shifting as rich Asians move to more developed countries.
The outflow of high-net worth individuals from China and India isn’t particularly concerning from an economic standpoint as far more new millionaires are being created there than are leaving, New World Wealth said.
“Once the standard of living in these countries improves, we expect several wealthy people to move back,” Amoils said. –Bloomberg
Turkey, meanwhile, lost 4,000 millionaires last year – the third straight year of losses, while around 7,000 Russian millionaires have left the country amid crippling sanctions related to the annexation of Crimea.
Meanwhile, the desire for privacy has prompted many rich families to reconsider where they call home.
Under the Common Reporting Standard, launched by the Organisation for Economic Co-operation & Development in 2017, banks and other financial institutions are disclosing data on foreign account holders to their local tax authority. Authorities automatically exchange relevant information with their counterparts overseas annually, allowing governments to zero in on tax evaders. More than 100 jurisdictions have joined CRS, setting a new precedent for the global exchange of data on offshore assets.
This trend is reflected in the growth in demand for second passports and residencies. –Bloomberg
“Many wealthy people are looking for opportunities to reduce risks associated with spreading information about their accounts,” said Polina Kuleshova of Henley & Partners, which counsels people on citizenship options and publishes rankings such as the Quality of Nationality Index.
There’s no place like home – unless you can make, or save more money elsewhere.