By Joseph Wong
While the redistribution of wealth across global regions remains a significant trend, a more profound shift is unfolding within generational boundaries. This shift is reshaping various aspects of society, from economic dynamics to consumer behaviour and beyond.
Knight Frank, a renowned global real estate consultancy, highlights five pivotal themes that underscore this generational transition and warrant close observation. These themes not only reflect evolving societal norms and values but also have profound implications for industries, markets, and policymakers worldwide.
The great wealth transfer will super-charge existing trends: Over the next 20 years, a massive transfer of wealth and assets will occur as the silent generation and baby boomers hand over the reins to millennials. The shift will see US$90 trillion (RM425.56 trillion) of assets move between generations in the US alone, making affluent millennials the richest generation in history. The difference in outlook between younger and older generations will result in a substantial reappraisal of marketing strategies for anyone wanting to sell products or services to this newly wealthy group.
Wealth is becoming more diverse: It may be starting from a low base, but the trend is undeniable. Recent survey findings from Altrata suggest women make up around 11% of global ultra-high net-worth individuals (UHNWIs). While still not a large share, this represents rapid growth from just 8% less than a decade ago.
Genz Z most confident in their ability to create wealth: Knight Frank’s Attitudes Survey reveals that 71% of UHNWIs globally anticipate growth in their wealth this year. For HNWIs, Knight Frank’s Next Generation Survey reveals a more conservative figure of 65%. A clear pattern emerges when data is analysed by age: Younger affluent groups are more confident about the economic outlook compared with older groups. Only 52% of HNWI boomers anticipate growing their wealth in the next 12 months, in contrast to 75% of Gen Zers, with 43% expecting significant growth. Male HNWIs express greater confidence than women. This is particularly pronounced among male millennials, with 75% expecting their wealth to grow, compared with 64% of women. However, for Gen Z, these expectations are entirely reversed, with a remarkable 81% of women in this group expecting growth. Half expect significant growth.
Environmental concerns will influence investment decisions: Climate change is an area which shows clear generational differences in priorities. Millennials appear to have got the message when it comes to cutting consumption – 80% of male and 79% of female respondents say they are trying to shrink their carbon footprints. Male boomers take a different view with just 59% trying to reduce their impact, well below their female peers (67%).
Property remains key for all wealthy groups: Where 22% of UHWNIs are expected to invest in a home purchase this year, only 19% of HNWIs are expected to take the same route. Boomers appear most reticent (8% and 7% for females and males respectively) while millennials are most active, with scores approaching UHNWI levels (23% for females, 21% for males). When it comes to commercial property, 19% of UHNWIs are considering investing this year.
Wealth forecasts
According to The Knight Frank Wealth Report, the number of wealthy individuals globally is expected to increase by 28.1% over the next five years to 2028. While positive, this rate of expansion is noticeably slower than the 44% increase experienced in the five-year period to 2023. The report points to strong outperformance from Asia, with high growth in India (50%), the Chinese mainland (47%), Malaysia (35%) and Indonesia (34%).
“With the mobility of wealth increasing all the time, a key question is whether future growth remains within these and other high-growth markets, or whether there is a leakage of talent to Europe, Australasia or North America. Outside Asia, strong growth is focused on the Middle East, Australasia and North America, with Europe lagging and Africa and Latin America likely to be the weakest regions,” said Knight Frank research global head Liam Bailey.
“The expanding cohort of wealthy individuals looks favourably on real estate. Almost a fifth (19%) of UHNWIs plan to invest in commercial real estate this year, while more than a fifth (22%) are planning to buy residential. Growth over the forecast period provides various opportunities for investors, particularly developers able to deliver property that suits the shifting tastes of the newly minted," he said.
Knight Frank Property Hub managing director Enoch Khoo added that the report highlights exciting opportunities for wealthy investors in Malaysia's real estate market. The rise in private capital investment shows readiness to tackle these challenges, offering ample opportunities for skilled individuals in the evolving real estate landscape.
“ As neighbouring jurisdictions continue to draw in wealth, Malaysia stands poised to capitalise on its proximity and complementary offerings, positioning itself as an attractive destination for affluent individuals and family offices seeking diverse investment opportunities and a favourable business environment,” he said.
While some sectors grappled with the lingering impact of elevated debt costs, particularly commercial real estate and private equity, residential property values surprised on the upside. Residential capital values grew by 3.1% across the world’s leading prime markets through 2023. For investors, residential returns were supported by prime global rents rising at an average three times their long-run trend.
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