How COVID-19 has changed the spending habits of millionaires worldwide

From acquiring new properties to exercising, the wealthy people have new preferences

Businessman wearing mask in the office for safety during pandemic. Image used for illustrative purpose.

Businessman wearing mask in the office for safety during pandemic. Image used for illustrative purpose.

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Social distancing has caused major changes in how millionaires worldwide make purchase decisions, according to a new report.

High-net-worth individuals (HNWIs), or those with wealth of $1 million or more, will be moving away from commercial airliners and towards private jet travel, especially among the super-rich, AfrAsia Bank and New World Wealth said in a report that talks about the many trends to look out for in 2020 and 2021.

Many HNWIs may also choose to work remotely and live in smaller towns, and when it comes to buying new properties, luxury residential estates will most likely be preferred, as wealthy people seek more open space.

“The coronavirus outbreak has caused many wealthy people to change their spending habits,” the report, which looks at wealth migration trends and the potential impact of the pandemic on the fortunes of the rich. 

Fall in income levels

The UAE is home to 340,000 HNWIs as of June 2020. The country’s wealthy population has dropped by more than 74,000 as the coronavirus outbreak has eroded the fortunes of HNWIs.

Around the world, private wealth levels also dropped by 14 percent in the first half of the year, driven by falling income levels, high job losses, weak property market, rising household debt and falling stock market returns, among others.

When it comes to wealth migration, however, estimates show a drop in inward and outward HNWI movement for 2020, as many people have been unable or unwilling to move due to the coronavirus outbreak.

“Some have put off moving till later date, while others have cancelled their plans to move altogether,” the report said.

Investor visa

However, in light of the coronavirus outbreak, the report said it is likely to become more difficult to get HNWIs to buy into traditional investor visa programmes. As a result, many programmes are expected to reduce their entry requirements this year and next.

“There are concerns that countries with large numbers of wealth expats such as the UAE may see an HNWI exodus in 2020/2021. This is a possibility in the short term (1 to 2 years). However, we expect the UAE, and Dubai specifically, to remain a popular destination for migrating HNWIs in the long term due to its status as the only real safe haven in the MENA region,” the report said.

More on spending habits

Another trend to look out for this year and in 2021 is that many HNWIs may choose to postpone international travel, so the luxury hotel sector in each country will become more dependent on local HNWIs.

They may also move away from large hotels and towards small boutique hotels to avoid the crowds, while indoor gyms will become less popular, as the wealthy may choose to move towards outdoor exercise.

“Outdoor hobbies/ sports that allow for easy social distancing (such as golf, hiking, fly-fishing, cycling and bird-watching) may become more popular,” said the report.

(Reporting by Cleofe Maceda; editing by Seban Scaria)

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© ZAWYA 2020

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