Ultrarich shattered many records last year

For Rich, ’13 Was Good for Making, and Spending, Money

By JULIE CRESWELL

You guessed it: The rich are getting richer. And — shocker! — they are having a pretty good time spending their money.

The ultrarich shattered many records last year, buying notable works of art, shiny baubles and sleek toys. A rare 1967 Ferrari Spider went for $27.5 million. Francis Bacon’s “Three Studies of Lucian Freud” sold for $142.4 million. And 12 bottles of 1978 Domaine de la Romanée-Conti, described by one expert as “as close to perfect as wine gets,” landed in someone’s collection for a cool $476,405.

The world’s club of ultrawealthy individuals, or those with $30 million or more in net assets, added about 5,000 new members last year and now stands at around 167,000, according to the latest Wealth Report, an annual compendium of all things rich from Knight Frank, the property management firm.

Over the last decade, the ranks of the über-rich have swelled by 59 percent, and the register of billionaires climbed 80 percent, to 1,682, according to Knight Frank’s data.

And most of the world’s 0.1 percenters had a pretty good year; three-quarters said their assets had increased. Only 4 percent said they wound up worth less, according to the survey, which polls 600 private bankers and wealth advisers who represent more than 23,000 clients.

While the United States, Japan and Germany are still home to more millionaires and billionaires than other countries, wealth is growing rapidly in the Middle East, Latin America, Australasia and Africa. By 2023, China is expected to have 322 billionaires, more than Britain, Russia, France and Switzerland combined, according to the report. The United States is forecast to have 503 billionaires in 2023, up from the current 417, according to the report.

Looking for someplace to park their wealth, the world’s rich still prefer property. In commercial real estate, wealthy families and individuals are buying hotels, office towers in Brussels and retail properties in Poland.

And while the rich typically have 30 percent of their wealth in their main residence and second homes — say, a seaside escape or a ski chalet — demands for vineyards, especially those in France, have also been on the rise, the report notes.

Among the biggest buyers? The Chinese.

The growing wealth in emerging economies has not gone unnoticed by global luxury brands. The chief executive of Rolls-Royce Motors Cars attributed much of the company’s record performance last year to developing markets. Sales soared 17 percent in the Middle East and grew 11 percent in China, according to the report.

Porsche is expected to enter the Kenyan market this year.

But more money can mean more problems for the newly rich in such places. Experts say they are increasingly looking for ways to protect their newfound wealth, whether from political instability or high taxes.

As various countries vie to attract investors, the result has been a binge of “passport shopping.”

A hotly debated proposal in Malta would allow the country to sell passports for 650,000 euros ($893,000) with no residency requirement.

Spain and Portugal are offering residency in return for spending only limited time in the country. Experts expect Latvia and Estonia to follow suit.

“For any country short of capital, this is a quick way of getting hold of it,” Nick Warr, the international head of wealth at Taylor Wessing, a law firm, said in the report.

Another popular — and controversial — route is investor visas, in which individuals are granted residency or citizenship in exchange for investment.

The United States, which limits the number of investor immigrant visas to 10,000 each year, granted 7,641 in 2012, the latest year for which data is available, the report said. Eighty percent went to Chinese investors.

In Britain, which, unlike the United States, does not tax individuals on their reported global wealth, the number of investor visas rose by a quarter in the first three-quarters of 2013. Over the last five years, half of those visas went to Russian and Chinese investors.

And while London remains the hot spot for the world’s wealthy, New York is forecast to surpass the British capital by 2024, thanks to its increasing importance to ultrawealthy Chinese, Russians and other Europeans.

If the wealthy made a mistake en masse last year, it was holding gold, which fell about 28 percent. A big chunk of the respondents in the survey said they would probably reduce their stake in the metal this year.

The ultrarich, however, continue to collect jewelry, watches and wine, while the biggest jump in popularity went to art.

An index of classic cars has had a five-year gain of 121 percent. Coins have risen 91 percent and rare stamps are up 50 percent.

The biggest laggard is furniture — and not the kind from Pottery Barn — which fell 16 percent in value over the last five years, according to the report.