Kenya’s wealthy outperform others around the world

• The world’s wealthiest saw their fortunes slashed globally by 10% in 2022 owing to challenges including post-pandemic property price falls, soaring energy prices, and surging inflation
• Africa’s super wealthy saw the lowest losses, recording an overall drop of just 5%

Kenya’s wealthy fared better than the wealthy anywhere else in the world during the economic turmoil of 2022, retreating from international citizenships and foreign property in favour of Kenya and Africa as safe havens.

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This is according to the 2023 attitudes survey issued with Knight Frank’s annual Wealth Report. As per the survey, the world’s Ultra-High Net Worth Individuals (UHNWIs) saw their fortunes slashed globally by 10% in 2022 on a cocktail of post-pandemic property price falls, soaring energy prices, falling stock markets, and surging inflation and interest rates.

The super-wealthy in Europe were by far the hardest hit, due to Russia’s invasion of Ukraine, suffering a fall of 17.3% in their fortunes.

However, Africa’s UHNWIs saw the lowest losses, recording an overall drop of just 5%.

Africa’s wealthy increase riches

Knight Frank’s Attitudes Survey of wealth managers also found that next to only Australasia, Africa delivered the highest proportion of clients who increased their wealth in 2022, at 64%, compared with the global average of 40% and just 24% in the Americas.

Commenting on the survey, Liam Bailey, Global Head of Research and Editor-in-Chief of The Wealth Report at Knight Frank said Kenya was somewhat spared by the global challenges.

“Nowhere in the world was immune from last year’s inflationary trends, or geopolitical risks. However, with the wealthy in Kenya and Africa less exposed to overseas property holdings and equity markets than HNWIs globally, their assets proved more resilient to the global disruption,” Bailey said.

At the beginning of 2022, wealth managers reported that about 19% of the property portfolios owned by Kenyan HNWIs were held overseas, compared with an average of 32% of overseas holdings by HNWIs globally.

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Since then, Kenyan HNWI’s overseas holdings have fallen further, to 11%, as they have actively exited foreign property markets.

The stronger investment environment in Africa also combined with key changes to investor visas -including the UK’s closure of its Tier 1 investor visa scheme in February 2022 – to reduce the number of Kenyan HNWIs planning to apply for foreign citizenship, which fell to 11% in 2023, compared to 28% a year ago.

Kenyan HNWIs favourite options for second home purchasing also shifted. Kenya remained the most popular choice, named as one of the top 5 locations by 60% of HNWIs, followed by the UK at 50% and US at 40%.

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Canada also increased in popularity, with 25% of the HNWIs including it in their top 5 locations. But, European locations Sweden, Denmark and Monaco disappeared from Kenyan HNWI’s top choices, while Egypt and Tanzania emerged as new entrants.

Globally, the survey noted that the fall in wealth is unsurprising given the dramatic pivot in monetary policy that culminated in the worst performance for the traditional blended portfolio since the 1930s.

Europe saw the largest decline in wealth with a drop of 17%, followed by Australasia with 11% and the Americas by 10%. Africa and Asia by comparison saw the smallest declines with 5% and 7% respectively.

Kenya’s super wealthy most optimistic about 2023

The survey noted that challenging markets meant the majority of UHNWIs saw their wealth decline last year, with their collective wealth falling by 10% (equivalent to US$10.1 trillion).

The epicentre of the crisis, Europe, was at the sharp end with an average 17% fall, while Africa demonstrated the most resilience with only a 5% drop.

Knight Frank Kenya CEO Mark Dunford said that in the general pivot away from international exposure and towards investment in Kenya and Africa, Kenya’s HNWIs were also the most optimistic in the world, with 50% expecting their wealth to increase by more than 10% in 2023.

“This compares with just 21% of global HNWIs expecting rises of the same level.”

Looking into the future, the survey noted that inflation will be a significant factor driving investment decisions in 2023, with 80% of respondents to our HNW Pulse Survey stating that it would influence their investment decisions either significantly (37%) or to some extent (43%).

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In order to navigate the higher inflationary environment, investors may pivot towards commercial real estate due to its strong growth potential, particularly in assets with indexation.

Nevertheless, there are indications that inflation may already have peaked across most major economies, and we could see its influence on investment choices start to moderate as the year progresses.