Knight Frank Report:Kenyan private investors concentrated in Africa during global turmoil
High Net Worth Individuals (HNWIs) in Kenya made some of the best returns of the world’s HNWIs in 2022 as they ramped up investments in rented residential and retail properties and reduced their positions in industrial property and development land, according to the 2023 attitudes survey issued today with Knight Frank’s annual Wealth Report.
Kenyan HNWIs have held a greater proportion of their investment portfolios in property and bonds than is the norm globally. In 2022, as energy prices and inflation rocked markets worldwide, many moved to increase those positions, with the proportion of HNWIs owning private rented property rising from 44 percent to 70 percent, and the proportion owning retail properties rising from 41 percent in 2021 to 70 percent in 2022.
At the same time, only 25 percent of the wealth managers for Kenyan HNWIs reported their clients remained invested in logistics and industrial properties, compared with 44 percent a year earlier.Mark Dunford, CEO Knight Frank Kenya, said: “The attitudes survey revealed a sharp portfolio shift in Kenya and Africa towards domestic markets, during this time of global turmoil. With Kenyan HNWIs also tending to hold a far higher proportion of their wealth in property and bonds than the global
average for HNWIs. This is playing a critical role in social provision, funding government borrowing and driving the growth of low-cost housing schemes, rented homes, shops, food (through agricultural
investments), healthcare and education development.”
Percentage of wealth managers handling HNWI client investments in the listed sectors;
|Hotels and leisure||40%||41%|
|Logistics and industrial||25%||44%|
|Residential private rented||70%||44%|
|Other (please specify)||0%||3%|
In terms of portfolio balance, property and bonds accounted for 66 percent of Kenyan HNWI’s holdings in 2022, while only 18 percent of their assets were held in stock market equities and just 5 percent in venture capital. This contrasted with a global position, where HNWIs worldwide held an average of 26 percent of their assets in stock markets in 2022, and 9 percent in venture capital and private equity.
HNWI portfolio balance for Kenya, the regions, and globally
Kenyan wealth managers also reported that private rented property, likewise, dominated their clients’ investment plans for the year ahead, with 60 percent planning to invest in private rentals, followed by 50 percent in retail. Liam Bailey, Global Head of Research and Editor-in-Chief of The Wealth Report at Knight Frank,said: “The property balance in Africa and Kenya’s portfolio mix, and the reduced exposure to equities and venture capital, served in 2022 to make African investments far more resilient, in sectors that were not immediately impacted through reduced profits from the surges in energy prices, and input inflation. As a result, nearly two-thirds of Kenyan and African HNWIs increased their wealth in 2022, compared with only 40 percent of global HNWIs.”
Kenyan private investors concentrate in Africa during global turmoil, with world’s most optimistic outlook;
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, according to the 2023 attitudes survey issued today with Knight Frank’s annual Wealth Report.
The world’s Ultra-High Net Worth Individuals (UHNWIs) saw their fortunes slashed globally by 10 percent last year on a cocktail of post-pandemic property price falls, soaring energy prices, falling stock markets, and surging inflation and interest rates. The wealthy in Europe were by far the hardest hit, due to Russia’s invasion of Ukraine, suffering a fall of 17.3 percent in their fortunes.
However, Africa’s UHNWIs saw the lowest losses, recording an overall drop of just 5 percent.
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 percent, compared with the global average of 40 percent, and just 24 percent in the Americas.
Liam Bailey, Global Head of Research and Editor-in-Chief of The Wealth Report at Knight Frank, said: “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.”
At the beginning of 2022, wealth managers reported that about 19 percent of the property portfolios owned by Kenyan HNWIs were held overseas, compared with an average of 32 percent of overseas holdings by HNWIs globally. In the year since, Kenyan HNWI’s overseas holdings have fallen further, to 11 percent, 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 percent in 2023, compared to 28 percent 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 percent of HNWIs, followed by the UK by 50 percent and US by 40 percent. Canada also increased in popularity, with 25 percent 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.
Mark Dunford, CEO Knight Frank Kenya, said: “In this general pivot away from international exposure and towards investment in Kenya and Africa, Kenya’s HNWIs are also the most optimistic in the world, with 50 percent expecting their wealth to increase by more than 10 percent in 2023. This compares with just 21 percent of global HNWIs expecting rises of the same level.
Knight Frank_The Wealth Report Final