London has overtaken New York as home to the highest concentration of dollar millionaires in the world, according to a report that reveals how much money the very richest people in the world have made during the coronavirus pandemic.
Nearly 875,000 Londoners are dollar millionaires (denoting assets worth more than £720,000), according to an annual study of the fortunes of the world’s wealthiest people by the property consultants Knight Frank.
It means one in 10 people living in London are dollar millionaires, with the data highlighting the yawning inequality gap in the capital. More than 2.5 million (or 28%) of those living in London are classed as “living in poverty”, according to government figures.
The report shows that 874,354 people in London have assets, including property, worth more than $1m, which makes them so-called “high net worth individuals” (HNWIs). That compares with 820,000 in New York, in second place.
Liam Bailey, Knight Frank’s global head of research, said the high cost of housing in the capital had tipped many people into the HNWI category. “The main point is that our HNWI threshold is $1m, so £720,000, and with average house prices in London at £514,000, a lot of households fall into the HNWI category,” he said. “Ironically, the high cost of housing in London is the main driver for categorising so many households as being wealthy.”
Bailey dismissed other reports suggesting an exodus from London for the countryside because remote working during lockdowns enables people to base themselves anywhere for work.
The research found that London had the most so-called “prime” homes of any city in the world, with more than 68,000 units valued at more than £2m each. There have been a flurry of super-rich property sales during the pandemic as rich overseas investors exploit the drop in the value of the pound and tax advantages thrown as a result of Brexit.
London was also named the rich person’s city of choice for lifestyle, according to Knight Frank’s survey of what wealthy people demand from cities such as Michelin-starred restaurants, opera houses and theatres, universities, sports and shopping facilities.
London is said to have also benefitted from an influx of rich Hong Kongers, many of whom left the former British colony amid worries about China’s authoritarian clampdown.
There was a 68% increase in number of so-called golden visas issued last year to people from Hong Kong promising to invest at least £2m in the UK, according to separate research by the City law firm Bates Wells.
London has the highest proportion of people living in low-income households of all regions in the UK, according to Department for Work and Pensions data. Across the capital, 28% of people are said to be “living in poverty” compared with the national average of 22%. That figure rises to 32% for those living in inner London.
The data shows that 800,000 – or 39% – of the capital’s children are living in poverty. It is the highest rate of child poverty since the data first started to be collected in 1994.
The Knight Frank wealth report shows that despite the economic destruction wrought by the pandemic on millions of people with modest incomes, those who were already very rich have been able to increase their fortunes.
More than 6,000 people joined the ranks of the ultra-wealthy last year as those in the top 0.1% were able to increase their already-vast fortunes despite the coronavirus pandemic.
The number of ultra-high net worth individuals (UHNWIs) – those with assets of more than $30m (£21.3m) – rose by 2.4% last year to 520,000.
The UHNWI population is expected to swell by a further 27% to 663,483 by 2025, the report estimates, as huge fortunes are being made in China, Indonesia and India. The number of dollar millionaires is expected to soar by 41% in the same period.
“Asia is the key wealth story. The US is, and will remain, the world’s dominant wealth hub over our forecast period, but Asia will see the fastest growth in UHNWIs over the next five years,” Bailey said. “China is key to this phenomenon with 246% forecast growth in very wealthy residents in the decade to 2025.”
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The report found that a person living in the UK would need a $1.8m (£1.3m) fortune to join the so-called 1% club of the richest people in the country.
In Monaco, where many of the world’s richest people live to avoid income taxes, a fortune of $7.9m is needed to join the top 1%. In Switzerland it is $5.1m. While in the US it is $4.4m, in Kenya the figure is $20,000.
The world’s richest people are worried that growing inequality could lead governments to impose wealth taxes, with the prospect of such a levy listed in the report as their biggest fear after coronavirus. Such taxes have been introduced in Argentina, Bolivia and Morocco.
In the UK, three prominent economists, including an adviser to the Treasury, have recommended the introduction of a one-off tax on anyone with more than £500,000 in assets, including property. The Wealth Tax Commission suggests a 1% tax on those individuals for five years could raise £260bn – enough to cover the full cost of funding the NHS for a year.