Cape Town is attracting large numbers of high-net-wealth individuals from other South African cities while it has also become a popular destination for wealthy individuals from elsewhere across Africa, Europe, Russia and the UK, the BRICS Wealth Report showed yesterday.
This was expected to drive growth in South Africa’s wealth by about 60% over the next 10 years. The report calculates South Africa’s gross gross domestic product (GDP) per capital at $11 200, a contrast to the World Economic Forum’s $13 243 (R250 469) calculation for 2023 behind the UAE, Saudi Arabia, China and Russia.
Cape Town is expected to play a key role in bumping up South Africa’s share of wealthy individuals. The Mother City was currently “benefiting from the ongoing ‘semigration’ of large numbers of HNWIs (high-net-worth individuals) from other parts of South Africa”, especially Johannesburg and Pretoria.
Andrew Amoils, the head of wealth research at New World Wealth, said: “It is also an increasingly popular retirement destination for migrating HNWIs from Africa, Europe, Russia, and the UK. Cape Town is projected to reach over 13 500 millionaire residents by 2033.”
Currently, there are about 7 400 HNWIs resident across Cape Town’s opulent suburbs that include Bantry Bay, Bishopscourt, Camps Bay and Clifton, among others. This was feeding into a booming private and wealth banking industry in South Africa.
“South Africa’s wealth management market is well positioned for success. It is a potential hub for other African wealth management markets, having one of the biggest stock exchanges in the world and a well-developed wealth management, fund management, and banking system,” noted the Africa Wealth Report 2023.
Although Cape Town was attracting wealthy individuals from elsewhere, many South African entrepreneurs, businesspeople, and wealthy families were embracing investment migration to other countries as a strategy “to improve their travel freedom and economic mobility, secure location optionality” and to mitigate risks.
Henley & Partners, which published the BRICS Wealth Report 2024, said it had seen “a significant increase in interest in residence and citizenship by investment”.
Amanda Smit, the managing partner for Henley & Partners in South Africa, said: “Enquiries rose by a staggering 43% in 2023 compared to the previous year, putting South Africans in the top 10 nationalities globally in terms of applications for and enquiries about investment migration programs, where it ranked seventh and eighth, respectively.”
Data from the advisory company showed Portugal as the “most popular programme” among South African investors. In the past year, South Africans had mostly applied for the Portugal Golden Residence Permit Programme, the St Kitts and Nevis Citizenship by Investment Programme, and the Dominica Citizenship by Investment Programme.
Reasons for domicile diversification given include “increased mobility” and secure additional options. The majority of South Africans applying for investment migration programmes were, however, not looking to emigrate but rather “to increase their mobility and to secure a plan B for their families” that will give access to world-class education and work opportunities and to diversify” their domiciles.
“Having a geographically differentiated portfolio of residences and citizenships not only protects our wealth, but also significantly enhances our prosperity, enabling us to leave a greater legacy for future generations,” explained Smit.
Although there has been widespread concern about governance shortfalls in both public and private spheres in South Africa, the country’s “effective legal system, entrepreneurial activity and telecommunications investment” had been deemed as an attractive incentive. South Africa was also a big destination for venture financing capital alongside Nigeria, Egypt and Kenya.
Jose Caballero, a senior economist at the IMD World Competitiveness Centre in Switzerland, said: “South Africa’s competitiveness strengths are underlined by its effective legal environment, open and positive attitudes, and the dynamism of its economy.”
South Africa’s small and medium enterprises sector also played a key role, with the new business density increasing from 6.58 registered new business per 1 000 people in 2014 to 12.5 in 2020. Similarly, the total early-stage entrepreneurial activity in the country rose from 6.97% of the population involved in entrepreneurial activities in 2014 to 17.49% in 2021.
Another competitiveness strength is the country’s attraction of direct investment flows which had increased from 36.47% of GDP in 2014 to 41.3% in 2021.
BUSINESS REPORT