Shed no tears for the uber-wealthy

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We can all take some comfort in the fact the wealthy are not suffering too greatly during this global downturn.

Nobody, surely, wants to see the haves going without the finer things in life - I mean, what is an evening out with a good dollop of caviar?

But, joking apart, could this be among the worst times in history to be among the elite of the super-rich.

Crooked hedge fund managers seem to be waltzing off with their fortune and taxes are being raised around the world, and are likely to rise further.

For people in the Middle East, luck might be running out as governments debate the pros and cons of tax. And, elsewhere, every politician running for election is taking potshots at the excesses of bankers and oligarch.

Even the offshore financial centres - usually the one place the wealthy could count on to be welcomed with open arms and a waiting limo - are contemplating handing over the details of accounts to the tax authorities back home.

It's enough to leave them crying into their last glass of bubbly. But they should try not to be too downhearted. In fact, there has never been a better time to be mega-wealthy. The plutocracy is entering a gilded era.

In what turned out to be the best-read story online last week, Emirates Business reported how all the things the wealthy need to maintain their lifestyles are getting cheaper. And there are a lot fewer of the super-rich around. The main point about being rich is not how much they have, but whether they have more than everyone else.

London-based wealth-management firm Stonehage calculates the cost of living for what it calls "ultra high net worth families". Its index, as reported last week, includes everyday essentials such as Beluga caviar, dinner at the Ivy, a day's grouse shooting, a grand tier box at the Royal Opera House, and breast-enhancement surgery.

None of them are cheap. They are, however, a bit cheaper than they used to be. Stonehage said the price index dropped about four per cent in the 12 months to April 2009, as luxury-property rents and discount-travel deals fell. By contrast, the inflation rate for the rest of the United Kingdom population, measured by the consumer-price index, was more than two per cent.

Meanwhile, the World Wealth Report produced by Capgemini and Merrill Lynch Global Wealth

Management found the number of millionaires in the UAE shrank by 12.7 per cent to 67,000 last year, as the ranks of the wealthy across the world thinned out amid the global economic downturn.
In the Middle East, the total number of high net worth individuals dropped to 373,600 and their wealth declined 16.2 per cent to $1.4 trillion (Dh5.1trn).

At the other end of the spending spectrum, and ironically at number two in our weekly ranking (see panel left) was a look at how mere mortals are cashing in their shopping loyalty card points like never before.

After years of accruing thousands of Air Miles or Skywards miles or whatever, consumers are redeeming them with fervour in a bid to save as much money as possible of necessary or luxury purchases, or even a flight home for the summer.

"Worldwide, the average increase in redemptions across different industries is between 12 and 25 per cent in the first two quarters of 2009," said Mamoun Masarweh, General Manager of global rewards provider Loylogic Middle East.

"One good example is the Best Western hotels, which has recorded a 36 per cent year-over-year increase in free night reward redemption during December 2008 and January 2009.

"Similarly, an even stronger trend has been recorded with the Etihad Guest programme, where the number of redemptions jumped more than 55 per cent year-over-year during the first two quarters of 2009."

© Emirates Business 24/7 2009