The UK is expected to see a net outflow of 3,200 high-net-worth individuals (HNWIs) in 2023 — higher than the projected 3,000 net loss for Russia, according to the Henley Private Wealth Migration Report 2023, which tracks wealth and investment migration trends worldwide. This will make the UK the third-biggest loser of millionaires globally after China (net loss of 13,500) and India (net loss of 6,500). Perhaps most notably, the UK’s anticipated HNWI flight is double that of last year, when it saw a net exodus of 1,600 millionaires.
The report released by the leading international residence and citizenship advisory firm Henley & Partners exclusively features the latest net inflows and outflows of dollar millionaires (namely, the difference between the number of HNWIs with investable wealth of USD 1 million or more who relocate to and the number who emigrate from a country) as projected by global wealth intelligence firm New World Wealth, which has been tracking wealth migration trends for over a decade. The HNWI migration figures focus only on HNWIs who have truly moved — namely, who stay in their new country more than six months a year. Note: All HNWI figures are rounded to the nearest 100.
“Down Under” back on top in 2023
Australia is expected to attract the highest net inflow of HNWIs in 2023 at 5,200, and although the UAE drops into 2nd place following its record-breaking influx in 2022, it is still expected to enjoy an impressive net arrival of 4,500 new millionaires this year. Singapore ranks 3rd with a net inflow of 3,200 HNWIs, its highest on record, followed the US with an expected net influx of 2,100 millionaires.
Switzerland (net inflow of 1,800) and Canada (1,600) are in 5th and 6th place, respectively, with Greece (1,200), France (1,000 — double last year’s net intake of 500 millionaires), Portugal (800), and New Zealand (700) all making it onto this year’s Top 10 list for net HNWI inflows. Israel is predicted to tumble out of the Top 10 with its net inflow of millionaires set to almost halve this year to just 600 compared to 1,100 in 2022.
Dr. Juerg Steffen, CEO of Henley & Partners, says there’s been a steady growth in millionaire migration over the past decade, with global figures for 2023 and 2024 expected to be 122,000 and 128,000, respectively. “In general, wealth migration trends look set to revert to pre-pandemic patterns this year, with Australia reclaiming the top spot for net inflows as it did for five years prior to the Covid outbreak, and China seeing the biggest net outflows as it has each year for the past decade. The notable exceptions are former top wealth magnets, the UK and the US.”
Brexit a bad bet for Britain, and US appeal waning
The UK’s peak net outflow year was 2017, following the Brexit referendum in 2016. Prior to this, the country enjoyed net positive inflows of HNWIs. While net losses dropped slightly between 2017 and 2019, the 2023 forecast indicates a far more significant millionaire exit is currently underway.
Prof. Trevor Williams, former Chief Economist at Lloyds Bank Commercial, says the data offers independent corroboration of the trend of HNWIs leaving the UK. “Whatever one may think about the merits of Brexit, this cohort is voting with its feet. Coupled with the policy change to remove permanent non-domiciled taxpayer status, Brexit has made the UK less hospitable and welcoming to HNWIs. It’s now harder for them to move between the UK and EU countries. And evidence shows that the UK’s share of inward investment into Europe has declined since it left the EU, with Germany and France benefiting.”
Commenting in the Henley Private Wealth Migration Report 2023, Sunita Singh-Dalal, Partner, Private Wealth & Family Offices at Hourani, agrees that “the recent unsettling British ‘Non-Dom debate’ triggered by unprecedented political volatility, coupled with rising debt, a dysfunctional healthcare system, high crime rates, and a general sense of lingering malaise, has clearly tarnished the lustre of London.”
The appeal of another financial giant, the US, is also dwindling fast. America is notably less popular among migrating millionaires today than pre-Covid, perhaps owing in part to the threat of higher taxes. The country still attracts more HNWIs than it loses to emigration, with a net inflow of 2,100 projected for 2023, although this is a staggering drop from 2019 levels, which saw a net inflow of 10,800 millionaires.
As leading personal finance columnist, author, and investment expert, Jeff D. Opdyke, points out in the report, “in the past, America was the obvious destination for wealth migrations because of its technology, leadership, and much vaunted freedoms. Soon, however, the US could begin to resemble the UK, traditionally one of the top destinations for migrating wealth, but which is now experiencing a net exodus of HNWI migrants because of the economic impacts wrought by the own goal known as Brexit.”
The other big losers in 2023
As it has for the past decade, China continues to lose the largest numbers of dollar millionaires each year to migration. Andrew Amoils, Head of Research at New World Wealth, explains that “general wealth growth in China has been slowing over the past few years, which means that the recent outflows could be more damaging than usual. China’s economy grew strongly from 2000 to 2017, but wealth and millionaire growth in the country has been negligible since then (when measured in US-dollar terms)”.
Although the second-biggest loser globally, India’s net exit numbers are predicted to drop to 6,500 in 2023 compared to last year (7,500) and as Amoils points out, “these outflows are not particularly concerning as India produces far more new millionaires than it loses to migration.” Singh-Dalal adds that “prohibitive tax legislation coupled with convoluted, complex rules relating to outbound remittances that are open to misinterpretation and abuse, are but a few issues that have triggered the trend of investment migration from India”.
The UK (3,200) and Russia (3000 vs 8,500 in 2022 following its invasion of Ukraine) sit in 3rd and 4th place respectively, with Brazil (1,200), Hong Kong (SAR China) (1,000 — less than half the actual net outflow in 2022), South Korea (800 — double the net outflow in 2022), Mexico (700), South Africa (500), and Japan (300 compared to last year’s net loss of 100) making up the rest of the Top 10 biggest millionaire losers forecast for 2023.
Commenting in the Henley Private Wealth Migration Report 2023, award-winning journalist and Rector of the Institute for Human Sciences in Vienna, Misha Glenny, says the lessons for those who hope to attract HNWIs are clear. “Political stability is the key metric for those selecting where they want to live, together with low taxation regimes and personal freedom. Until the Russo–Ukrainian war comes to end, both countries will continue to export HNWIs, and this will remain the single largest driver of relocation. But with elections due in many key Western countries in the next 18 months, other HNWIs may wait until their outcome, notably in the US and the UK, before making their choice.”
Relentless uncertainty fuels demand
Henley & Partners received the highest number of investment migration program enquiries on record in the first quarter of 2023 — an increase of 36% compared to the previous quarter, and a remarkable 47% higher than the same period in 2022, which was itself a record-breaking year. The top two nationalities currently driving demand are Indians and Americans, with Brits and South Africans remaining in the Top 10 as they have done for the last five years.
Dr. Areef Suleman, Director of Economic Research and Statistics at the Islamic Development Bank (IsDB) Institute, notes in the report that the impact of HNWI migration on destination countries is likely to be beyond the investment itself because of a multiplier effect. “If the USD 1 million coming from HNWIs are invested in a business, it could generate employment and additional demand from existing domestic producers, which multiplies its impact to an amount greater than the initial investment. Meanwhile, for source countries, the opportunity lost is mitigated by the flow of remittances and international connections in the form of trade, foreign direct investments, and technological transfers from destination countries.”
Popular investment migration pathways
Portugal’s Golden Residence Permit Program remains the most popular overall in 2023, followed by Austria’s citizenship by investment offering and St. Kitts and Nevis’s Citizenship by Investment Program. Next is Canada’s Start-Up Visa Program, the fastest way for entrepreneurs and wealthy individuals to access Canadian residence and the North American market. Rising in popularity this year and last in the top five is Italy’s Residence by Investment Program, with Greece’s Golden Visa Program and Spain’s Residence by Investment Program hot on the heels of their Mediterranean counterpart.
Dominic Volek, Group Head of Private Clients at Henley & Partners, says historically, many wealthy individuals acquired residence rights or citizenship without moving to those countries. “Recent and persistent turmoil has caused a shift — more investors are considering relocating their families for a range of reasons, from safety and security, to education and healthcare, to climate change resilience and even crypto-friendliness. It is important to note that nine of the Top 10 countries for forecast net HNWI inflows in 2023 host formal residence by investment programs that encourage foreign direct investment in return for the right to reside, which can also lead to citizenship in some cases. Investors see the clear value of diversifying their domicile portfolios as the ultimate hedge against both regional and global volatility, now and in the future.”
Opdyke agrees, highlighting that “wealth migration has always been about chasing greater opportunity while also taking wealth out of harm’s way. That will never change. But what will change — what’s already changing — is the landscape that defines where wealth will likely migrate to tomorrow. Wealth insists on mobility as an option — an escape hatch allowing HNWIs to decamp from a decaying situation and root once more in economies more welcoming to their wealth or their business objectives.”
Courtesy: Henley & Partners, the global leader in residence and citizenship by investment.