Key findings from the Knight Frank 2019 Wealth Index

Last year, New York didn’t simply rank first overall on the Knight Frank Wealth Report but dominated all the report’s key categories. By contrast, London ranked second overall and as low as fifth place in one category (lifestyle). This year, the two cities virtually reversed their positions. London now dominates the wealth index overall and ranks first in all but one category. As stated in the introduction to the Knight Frank 2019 Wealth Index, “Hard Brexit, no Brexit, Brexit-lite: whatever the outcome, London will remain the leading global wealth centre in 2019. With the world’s largest UHNWI (ultra-high net worth individual) population, the city sweeps the board in our annual City Wealth Index, pushing its only serious rival, New York, into second place.”

The three main measures used in the Knight Frank Wealth Index are wealth, investment, and lifestyle. Under wealth, the Index measures the concentration of high-net-worth individuals and ultra-high-net-worth individuals. Investment digs into data on major property investments (namely, those exceeding US $10 million or more) across both the commercial and residential markets but focuses only on those made by private individuals or family offices. Finally, the index considers lifestyle—for example, a city’s number of luxury hotels and the quality of its restaurants.

In 2019, New York only managed to hang on to the lead in one category—investment. In terms of volume of investment and its diversity (e.g., the number of different nationalities investing), New York came out on top, even exceeding investment activity its rival city of London.

In terms of wealth, which the Knight Frank report measures by looking at the city’s HNWI (those with net assets of more than US$1 million) and UHNWI (those with net assets of over US$30 million), New York now trails London. That said, New York City still tops many other major cities around the world, including Hong Kong, Singapore, and Paris, and many U.S. cities, including Chicago, Los Angeles, and San Francisco.

Finally, at the level of lifestyle, New York City is now not only trailing London but also Singapore. Lifestyle measures myriad factors including education (quantified in the report by the number and quality of the city’s universities), security, and a range of other “luxury indicators,” including the number of five-star hotels and the quantity and quality of the city’s leading restaurants. However, given that London bounced from fifth to first place on this year’s Wealth Index, there is hope that New York may regain top spot in 2020.

State and local tax laws are having less impact than feared

One of the most surprising findings in this year’s Knight Frank Wealth Index is that New York City continued dominance in the investment category. If the news comes as a surprise, it is because there has recently been considerable concern about how proposals to raise the SALT (state and local taxes) for high-net-worth individuals, including a new mansion tax on properties worth more than $2 million, might cool the market. But all and all, neither the SALT nor strong U.S. dollar, which has distracted some foreign buyers over the past year, appears to have severely impacted investment to date.

Predictions for the coming year

As for predictions for the next year, the Frank Knight Wealth Index forecasts that five cities (Buenos Aires, Dubai, Hong Kong, Mumbai, and Shanghai) will see prices fall; two cities (New York and Singapore) will see prices remain static; and the remainder of the cities on the index will see prices rise modestly. For New York, this likely means holding its current number two place on the Wealth Index in 2020 or, perhaps, slipping just slightly. Among the many factors that appear likely to keep the city at the top of the Wealth Index over the coming years is the world’s current “wealth migration.” As political tensions rise in many nations around the world, including China, Russia, and Turkey, wealth continues to migrate to several other nations, with Australia and the United States (in particular, Sydney and New York City) benefiting most directly from the current wealth migration.