As France and Germany push for a “hard Brexit,” London is facing the risk of losing its appeal to HNW investors worldwide, as well as struggling to retain the ones already in loco.
London has always attracted HNW individuals from around the world as a place to settle. Be this for its world-class education or cosmopolitan culture, people have long been drawn to live and settle in the city. As many argue, London has matured this attractive profile over time, developing a set of “pull factors” that have lured HNW individuals to invest in the city. Its leading-edge real estate market and financial services sector, along with its multiculturalism and welcoming atmosphere, are attractive drivers for individuals from any background.
Moreover, according to a Barclays’ survey, today’s HNW individuals are habitual “country hoppers,” with almost half having lived in more than one country. To the new generation of highly mobile HNW investors who need to travel to Paris or Frankfurt for business or study, for example, free movement is paramount. Access to the rest of the European continent without visa restrictions places London among the most attractive cities in the world.
However, this might soon change. In the wake of Brexit, the future of the global migration of HNW investors looks a lot less bright from London’s perspective. The incumbent French and German leaders are not willing to allow special concessions for Britain: exiting the EU means losing the benefits of the common market as well its inconveniences. The UK may benefit from independence in terms of tax and financial policies, but when comparing different residency and citizenship programs, EU countries – such as Malta or even Greece – will look more appealing to investors looking to gain access to the EU single market. That said, next year negotiations will be dealt with by new prime ministers in both France and Germany, and the shape that migration policies will take is still for the most part uncertain.
However, according to our Global Wealth Markets Analytics, the HNW population in the UK is forecast to grow steadily at a rate of above 4.5% until 2020, quicker than in the EU. London-based wealth managers will not be overly worried by the competition posed by the financial markets in Paris or Frankfurt, as even without HNW migration, they will find enough business growth opportunity in the local market.
In fact, UK wealth managers can play a vital role in maintaining London’s status as a HNW investor hub. Closely monitoring investment market moves will allow them to discover great buying opportunities for long-term investments, offered by short-term volatility. If they deliver outstanding returns and continue to provide a high level of service in general, millionaires from abroad will remain inclined to move their assets to the UK despite Brexit. It will be in foreigners’ interests to keep access to the best-in-class financial services in London, not the other way around. And that fact in turn will be a strong bargaining card for the UK government when negotiating with the EU.
By Silvana Amparbeng, Wealth Management Analyst