Over the next 20 years, Gulf millennials, or people born between 1981 and 1996, along with their peers across the world, are expected to inherit some $90 trillion of assets and become the richest generation in history, according to the latest research by global property consultant Knight Frank.
Also known as Generation Y, millennials are a demographic cohort, or age group, that falls between Gen X and Gen Z. They’re called millennials because the oldest members of this generation became adults at the turn of the millennium.
“Between 2024 and 2044, the silent generation (born between 1928 and 1945) and baby boomers (or Gen X 1946-1964) are expected to hand over the reins of their significant wealth to millennials,” said The Wealth Report, a periodic research report from Knight Frank.
But these are only the ones who already come from affluent families, potentially deepening wealth inequality further, Knight Frank said in its report that also projected a 28 per cent surge in the total number of wealthy people over the next five years. Most growth in ultra-high-net-worth individuals is expected in Asia, including India, China, Malaysia and Indonesia, the report said.
The research found that almost 70 people a day joined the ranks of the uber-wealthy last year, boosting the worldwide number of ultra-high-net-worth individuals, or UHNWIs, by 4.2 per cent to about 627,000, the real estate group said in its latest Wealth Report.
A net worth of at least $30 million is required to be classed as a UHNWI. But it’d take only $5.8 million to rank in the top 1.0 per cent of wealthy Americans, Knight Frank said.
This wealth shift is a result of inheritance from prior generations, largely involving property but also other assets. It will bring “seismic” changes to how wealth is put to use, Liam Bailey, global head of research at Knight Frank, said in a statement.
The research also showed that affluent young people are less likely to see property or real estate as a way to build wealth in the future.
“The low interest rate environment and impressive growth in house prices over the past 15 years is unlikely to be repeated in the next 15,” Mike Pickett, director of Cazenove Capital, said in the report. There’s evidence, he said, that the following generation, Gen Z, may be more comfortable renting a home, leasing a vehicle and living a subscription lifestyle than prior generations.
Pickett added that not only will wealth be transferred to these younger people, but there are a variety of new ways to build wealth. “It goes beyond a simple shift of existing wealth,” Pickett said. “I think the diversity of opportunity to create wealth has also grown — for example, there are YouTubers worth tens of millions. First-generation wealth creation is on the rise, as is the array of entrepreneurial routes to create it.”
According to the report, North America saw its share of the ultra-wealthy grow the most of any region, rising 7.2 per cent from last year. It was followed by the Middle East, with a 6.2 per cent increase in the super-wealthy; and Africa, which increased by 3.8 per cent. Latin America is the only region to see its population of ultra-wealthy individuals decline, dropping 3.6 per cent from a year ago.
“The improving interest rate outlook, the robust performance of the US economy and a sharp uptick in equity markets helped wealth creation globally,” said Bailey.
This group of uber-wealthy individuals finds property an attractive investment, the report found. About 19 per cent of this group plans to invest in commercial real estate this year, while 22 per cent plans to buy residential property.